The Securities and Exchange Commission took enforcement action against 12 financial firms for failing to meet their obligations in delivering Form CRS to their retail investors, according to Advisor News.
Every broker or dealer registered with the SEC is required to file Form CRS, a new customer or client relationship summary. The commission announced last week that six investment advisers and six broker-dealers agreed to settle charges that they had failed to file and deliver the summaries by the required deadline. In some cases, the SEC said the firms failed to include all the information that is necessary to satisfy Form CRS requirements.
Registered investment advisers and broker-dealers were required to file their Forms CRS with the SEC, begin delivering them to prospective and new investors by June 30, 2020, and deliver them to existing retail investor clients or customers by July 30, 2020. The commission previously reached settlements in 2021 with 30 other RIAs and broker-dealers charged with similar violations.
“With today’s actions, the SEC has now charged forty-two financial firms for failing to meet the obligations that are required to ensure retail investors understand their relationships with their securities industry professionals,” said Sanjay Wadhwa, Deputy Director of the SEC’s Enforcement Division. “We urge firms that continue to be delinquent in fulfilling their Form CRS obligations to come into compliance with the law and to self-report to the SEC.”
The 12 additional firms were found to have violated Section 204 of the Investment Advisers Act of 1940, Advisers Act Rules 204-1 and 204-5, Section 17(a)(1) of the Securities Exchange Act of 1934 and Exchange Act Rule 17a-14.
The firms did not admit or deny the findings, but agreed to be censured, to cease and desist from violating the charged provisions, and to pay civil penalties.
The securities compliance attorneys at Hyman Cotter PC include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. We regularly monitor SEC, FINRA and other self-regulatory organizations’ rule-making activities to help ensure that our clients are aware of any new policies, while assisting them in implementing any recommended changes. If your firm is facing an investigation from a regulatory agency, please contact Hyman Cotter PC at 312-291-4600 or through our online contact form.
