FinchipAIOrg Skill: Form ADV Part 2A Regulatory Deficiency Review
2. Failure modes the skill is correcting
- Reviewer treats the brochure as a standalone marketing document and misses discrepancies that appear only when cross-checked against compliance materials, fund documents, personnel records, filings, or correspondence.
- Reviewer skips item-by-item coverage and fails to test each required Form ADV disclosure item against the adviser’s actual practices.
- Reviewer identifies problems but does not tie each one to the specific Item number and governing disclosure requirement, making remediation difficult.
- Reviewer gives narrative criticism without a severity assessment, leaving the client unable to distinguish immediate amendment issues from next-cycle cleanup.
- Reviewer describes a gap but does not state the downstream compliance, investor-protection, or operational consequence.
- Reviewer omits concrete remediation steps or urgency, turning the memo into diagnosis without actionability.
- Reviewer overlooks disclosure obligations triggered by facts outside the brochure itself, including disciplinary events, custody, affiliated relationships, wrap fee activity, or material business changes.
- Reviewer fails to anchor conclusions in the controlling regulatory authority for each disclosure point.
3. Legal frameworks / domain conventions that apply
Item-by-item disclosure audit. Form ADV Part 2A is reviewed as a structured disclosure instrument, not a free-form narrative. The correct method is to compare each required Item against the adviser’s actual business practices and the supporting record set, then identify omissions, inaccuracies, or stale disclosures.
Cross-document consistency. The brochure must be tested against source documents that reflect actual operations and risk factors, including compliance policies, offering materials, governing documents, internal approvals, regulatory correspondence, and any transaction or restructuring materials that could affect disclosure.
Severity framework. Each finding must be labeled on an ordinal scale used consistently throughout the memo: Critical, High, or Medium. Critical applies to material misstatements, missing disclosure that creates immediate regulatory or investor harm risk, or issues requiring immediate amendment. High applies to material gaps or inconsistencies requiring prompt correction. Medium applies to incomplete, stale, or best-practice deficiencies suitable for the next scheduled update unless facts require faster action.
Item 4 — advisory services and strategies. All services and strategies currently offered must be described. An operational strategy or service omitted from Item 4 is a material disclosure defect because it obscures the scope of the business. Authority: SEC Form ADV Part 2A, Item 4.
Item 5 — fees and compensation / AUM methodology. Fee schedules and AUM descriptions must match actual practice, including the basis on which fees are calculated and the categories of assets included in any stated asset figures. Authority: SEC Form ADV Part 2A, Item 5.
Item 9 — disciplinary information. All reportable disciplinary events and material legal events must be disclosed. Examination correspondence, deficiency letters, or formal orders that are reportable under the brochure instructions must be cross-checked against Item 9. Non-disclosure is a serious defect. Authority: SEC Form ADV Part 2A, Item 9.
Item 10 — other financial industry activities and affiliations. Affiliated broker-dealer relationships or comparable affiliations must be disclosed together with the conflicts they create. Authority: SEC Form ADV Part 2A, Item 10.
Item 12 — brokerage practices and soft dollars. All soft dollar arrangements and related research or services must be disclosed, including any shared use, client-group allocation, or out-of-safe-harbor benefits. Authority: SEC Form ADV Part 2A, Item 12.
Item 15 and custody rule. If the adviser has custody, including deemed custody arising from fee deduction authority, the brochure must disclose custody, identify the qualified custodian, and explain account statement delivery. Authority: Advisers Act Rule 206(4)-2 and SEC Form ADV Part 2A, Item 15.
Item 17 — proxy voting. The brochure must disclose whether the adviser votes proxies, how clients can obtain proxy-vote information, and how proxy conflicts are handled. Authority: SEC Form ADV Part 2A, Item 17.
Item 18 — financial information. If the adviser requires prepayment of substantial fees, the brochure must disclose any financial condition that could impair performance. Authority: SEC Form ADV Part 2A, Item 18.
Item 2 — material changes. Pending transactions, acquisitions, restructurings, or similar events that materially change the adviser’s business must be flagged as material changes. Authority: SEC Form ADV Part 2A, Item 2.
Appendix 1 — wrap fee programs. If wrap fee activity exists, the brochure must include the required wrap fee disclosure materials. Authority: SEC Form ADV Part 2A, Appendix 1.
4. Analytical scaffolds
Build the item matrix first. List each Form ADV Part 2A item that could be implicated by the source set, then identify the supporting documents that bear on that item. If only one fact pattern is in scope for an item, say so expressly and explain why.
Review each item against the record. For each item, compare the brochure disclosure to the adviser’s actual practices and the supporting documents. Capture omissions, inconsistencies, outdated descriptions, incomplete explanations, and mismatches in terminology or scope.
Close each issue fully. Each finding should do three things: state the scale or factual scope of the issue using the source record, identify the related Item and controlling authority, and explain the consequence to the client or investor. A bare description is not enough.
Classify before recommending. Assign severity first, then describe why the issue rises to that level, then state the remediation needed. Use specific, operational recommendations rather than general advice.
Treat conflicts and triggers as disclosure prompts. Where the source set indicates a relationship, arrangement, event, or transaction that may trigger disclosure, test whether the brochure addresses it affirmatively and accurately, not merely whether the brochure is internally consistent.
5. Vertical / structural / temporal relationships
Disclosure depends on current operations. If the adviser has changed strategies, personnel, fee practices, custody posture, affiliations, or proxy voting practices, the brochure must track the current state, not a historical or aspirational version.
Later-in-time facts can supersede brochure language. Pending transactions, restructuring steps, examination correspondence, or disciplinary events may require immediate updating or a material changes discussion even if the annual amendment cycle has not yet arrived.
Cross-references matter. A correct Item 9, Item 10, Item 12, or Item 15 analysis often requires reconciling the brochure with other records that reveal the operative facts. The review should not assume the brochure is exhaustive.
6. Output structure conventions
Produce a findings memo organized by Form ADV Item number using conventional memo headings rather than a rubric-style checklist.
For each finding, include:
- Item number
- Short issue heading
- Severity: Critical / High / Medium
- Description of the deficiency
- Controlling authority or regulatory basis
- Why the source record shows the issue
- Consequence to the adviser or clients
- Recommended remediation and timing
Keep the writing concise but specific. Each recommendation should be imperative, identify the responsible role if the record supports it, and include an urgency anchor tied to the next amendment, filing cycle, or other relevant regulatory milestone.
End with a short Recommended Actions section that groups the required follow-up steps by priority and timing.