SEC Fines 21 Firms for Failing to File and Deliver Form CRS
The SEC fined 21 firms for failing to file with the SEC, and deliver to clients, Form CRS (aka Customer Relationship Summary), adopted as part of Regulation Best Interest.
Form CRS, the customer relationship summary adopted as Part 3 of Form ADV, requires disclosure about a retail advisor’s fees, conflicts, and other material information about the advisor’s role. Firms have been required to file the form since June 30, 2020 and deliver the form to clients since July 30, 2020. The SEC charges that the 21 censured firms completely failed to file and deliver Form CRS even after warnings from the SEC. The fines ranged from $25,000 to $97,523.
Hire a full-time chief compliance officer or a compliance services firm. The SEC’s rules are always changing and, unless you are focused on compliance, you may miss new obligations, resulting in bad outcomes. The filing and delivery requirements are not intuitive, and there are no real defenses for failure to observe the rules. Next up? We expect actions alleging that filed Form CRSs are inadequate.
Read one of the orders here.