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

On July 26, 2021, The Securities and Exchange Commission (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 client or customer relationship summaries – known as Form CRS – to their retail investors.

Form CRS requires SEC-registered investment advisers and SEC-registered broker-dealers to file Forms CRS with the SEC, deliver them to prospective and new retail investors, and deliver them to existing retail investor clients or customers.  The SEC also requires firms to prominently post their current Form CRS on their website.  The original deadline for these filings was June 30, 2020.

According to the SEC’s orders, each of the firms charged missed the original deadlines to file Form CRS.  The orders find that none of the firms filed or delivered their Form CRS, or posted it to their websites, until being twice reminded of the missed deadlines by the SEC’s Division of Examinations or the Financial Industry Regulatory Authority, as applicable. 

The SEC’s orders found that the investment advisers violated Section 204 of the Investment Advisers Act of 1940 (“Advisers Act”) and Advisers Act Rules 204-1 and 204-5, and that the broker-dealers violated Section 17(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), 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.

If you have any questions about this Alert, or any other regulatory matters, do not hesitate to reach out to Daniel Viola (Partner – Head of the Regulatory Group) at 212.573.8038 or via email at dviola@sadis.com or to Nicole Arrow (Associate) at 212.573.8148 or via email at narrow@sadis.com.