Twelve financial firms, six broker-dealers and six investment advisers agreed to pay penalties ranging from $10,000 to $97,523 to settle SEC charges alleging that the firms failed to meet Form CRS obligations. These Orders are the second batch of enforcement actions against brokers and advisers for failing to timely comply with Form CRS obligations.
SEC-registered broker-dealers and investment advisers were required to file the Form CRS with the Commission and post it to their website by June 30, 2020. In addition, all brokers and advisers were required to deliver their Forms CRS to new customers by June 30, 2020, and to existing customers by July 30, 2020. The SEC Orders stated that those 12 firms all failed to file and deliver client or customer relationship summaries to their retail investors by the required deadlines and, in some cases, failed to include all information necessary to satisfy Form CRS requirements. The investment advisers were found to have violated IAA Section 204 ("Reports by IAs") and Advisers Act Rule 204-1 ("Amendments to Form ADV") and Rule 204-5 ("Delivery of Form CRS"), and that the broker-dealers were found to have violated SEA Section 17(a)(1) ("Records and Reports") and Exchange Act Rule 17a-14 ("Form CRS, for preparation, filing and delivery of Form CRS").
In addition to agreeing to pay civil penalties, the firms agreed (i) to be censured and (ii) to cease and desist from violating the charged provisions.
Commentary Steven Lofchie
The firms were all charged with very straightforward violations, such as failure to file. None of the violations was based on the substance of the reports.
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