When the composition of an investment adviser's partnership changes, what must the adviser do?

When there is a change in the composition of an investment adviser’s partnership, the adviser is required to notify its clients about the change. This communication is crucial as it informs clients about significant modifications that may affect the management and operation of their investments. Clients have a vested interest in understanding who is managing their assets, so keeping them informed fosters trust and maintains transparency in the adviser-client relationship.

While notifying the SEC might be a consideration in some circumstances, particularly if the adviser is registered with the SEC and the changes could impact their registration or compliance, the primary requirement is to ensure that clients are made aware of any changes that affect their relationship. Filing a new partnership agreement typically is not necessary for the sole purpose of notifying clients, as the adviser can provide adequate information through direct communication. This clear emphasis on client notification reflects the regulatory intent to protect investors and ensure they are aware of who is managing their money.