SEC Charges 27 Financial Firms for Form CRS Filing and Delivery Failures

Effective June 5, 2019, The Securities and Exchange Commission (“SEC”) adopted Form CRS, a relationship disclosure form. “CRS” stands for customer or client relationship summary). Form CRS required SEC registered investment advisers and FINRA member, SEC registered broker dealers to electronically file and deliver a detailed summary to prospective and new retail investors by June 30, 2020, implementation date.

In consistent efforts to protect retail investors, the SEC requires investment advisers and broker dealers to deliver a summary of the services offered, fees, conflicts of interest, and supportive information assisting investors to make informed investment choices.

On July 26, 2021, the SEC announced that 21 investment advisers and 6 broker dealers have agreed to settle charges that they failed to timely file and deliver their Form CRS to prospective and current retail clients after being twice reminded. Each of the disciplined investment advisers violated Section 204 of the Investment Advisers Act of 1940 and Advisers Act Rules 204-1 and 204-5, and each of the disciplined broker-dealers violated Section 17(a)(1) of the Securities Exchange Act of 1934 and Exchange Act Rule 17a-14. The SEC has stated this order reinforces the importance of SEC registrants meeting specified obligations and providing retail investors with information that is pertinent in understanding their relationship with securities industry professionals as well as the ability to make well-versed investment choices. Without admitting or denying the findings, the firms agreed to be censured, to cease and desist from violating the charged provisions, and have agreed to pay civil penalties ranging from $10,000 to over $97,000.