More than two dozen investment advisers and broker/dealers (B/Ds) have agreed to settle charges that they allegedly failed to timely file and deliver key forms to retail investors.
According to the U.S. Securities and Exchange Commission (SEC), the 21 investment advisers and six B/Ds that were charged were all SEC-registered and had missed regulatory deadlines to submit customer relationship summaries, known as Form CRS.
The SEC adopted the Form CRS on June 5, 2019. It required SEC-registered investment advisers (RIAs) and B/Ds to file their respective Forms CRS with the SEC; begin delivering them to prospective and new retail investors by June 30, 2020; and deliver them to existing retail investor clients or customers by July 30, 2020. The SEC also requires firms to prominently post their current Form CRS on their website if they have one.
According to the SEC’s order, none of the firms that were charged had filed or delivered their Forms CRS, or posted it on their websites, until they were reminded twice of the missed deadlines through their regulators—the SEC’s Division of Examinations for investment advisers and the Financial Industry Regulatory Authority (FINRA) for broker/dealers.
The SEC said the investment advisers violated Section 204 of the Investment Advisers Act of 1940 and Advisers Act Rules 204-1 and 204-5, and the B/Ds violated Section 17(a)(1) of the Securities Exchange Act of 1934 and Exchange Act Rule 17a-14. Without admitting or denying the findings, the firms agreed to be censured, to cease and desist from violating the charged provisions, and to pay civil penalties.
The SEC statement, along with a list of all charged parties and their penalties, can be found here.