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Item 10 identifies control persons not already disclosed elsewhere on Form ADV - individuals or entities that exercise control over the investment adviser's management or policies but do not appear in Item 1.A. or the firm's Schedules A, B, or C.
Control in this context means the power to direct or cause the direction of management and policies through ownership, contract, or other arrangements. The SEC defines control broadly to capture various relationships that might affect the adviser's independence, decision-making, or conflicts of interest.
Item 10A asks a single Yes/No question: Does any person not named in the basic identifying sections directly or indirectly control the adviser's management or policies? A Yes answer requires additional disclosure about the controlling person's identity and relationship to the adviser.
This section helps complete the ownership and control picture that begins with Item 1 identifying information and Schedules A, B, and C covering officers, directors, and major shareholders. Item 10 catches control relationships that might not fit standard corporate governance categories but still influence adviser operations.
Understanding Item 10 helps you assess who really runs the investment adviser and whether undisclosed control relationships might affect the firm's independence, decision-making, or potential conflicts of interest. Control persons wield significant influence over advisory operations even if they do not hold formal corporate titles.
Some control relationships are obvious - a parent company owning 75% of the adviser clearly exercises control. Others are subtler - a major client providing most of the firm's revenue might exercise control through economic dependence, or a key employee might control operations through specialized expertise and relationships.
Locate Item 10 on the firm's ADV form panel on Best Investors. The section typically appears as a single question with Yes/No response and potential follow-up detail.
Check 10A - unnamed control person for any Yes answer indicating control persons beyond those already identified in Item 1.A. and the related Schedules.
If 10A is Yes, look for additional disclosure on the same ADV panel or in related Schedule sections that identify the controlling person and describe the nature of the control relationship. The firm should explain who exercises control and how that control operates in practice.
Cross-reference Item 10 information with Item 1 identifying information and Item 3 form of organization to build a complete picture of the adviser's ownership and control structure.
Ask the firm to explain any Yes answer in Item 10: Who is the controlling person? How do they exercise control over management or policies? What is their background and relationship to the adviser? How might this control relationship affect advisory services or potential conflicts?
Consider control relationships in context with your preferences for adviser independence and decision-making autonomy. Some control relationships might provide valuable oversight and resources. Others might create conflicts or limit the adviser's ability to act solely in client interests.
Pay attention to control relationships that might change over time. Investment advisers sometimes experience ownership transitions, management changes, or evolving control arrangements that affect operations and client relationships.
Item 10 identifies the existence of control relationships but does not describe their day-to-day impact on adviser operations, decision-making processes, or client service delivery. Control might be exercised actively through regular oversight or passively through reserve powers rarely used.
The section does not provide complete organizational charts or ownership percentages that help you understand the full scope of control relationships and their relative importance to adviser governance.
Item 10 does not address the quality, competence, or integrity of control persons beyond their basic identification. The controlling person's background, experience, and potential conflicts require separate investigation.
The section also does not indicate whether control relationships create benefits or problems for clients. Some controlling persons provide valuable strategic guidance, operational support, or financial resources that enhance client service. Others might create conflicts, operational constraints, or strategic misalignment.
Timing and circumstances around control relationships remain unclear from Item 10 alone. Recent control changes, planned transitions, or evolving relationships might significantly affect the adviser's future direction and client service capabilities.
Finally, Item 10 does not address regulatory oversight or approval of control relationships. Some control changes require regulatory approval while others occur through private arrangements not subject to prior review.