Form CRS Exam Sweep & Enforcement

As we wrote last month, the SEC has been full throttle in targeting firms for enforcement for failing to file and deliver Form CRS where it is required. On July 26, the SEC announced charges against 27 firms, broker dealers and investment advisers, with civil penalties ranging from $10,000 to $97,523.

According to the SEC’s press release, each of the firms charged missed the June 30, 2020 filing deadline and did not meet the filing and delivery requirements until being reminded twice by regulators. The firms agreed to a censure, to cease and desist from violating the relevant provisions, and to pay the civil penalties, that were based on RAUM.

We believe the failure to file threshold was low-hanging fruit. We know that the SEC can use the registrant database to easily identify most firms that should have Form CRS on file, but do not. Next up will be a more qualitative assessment of whether firms that did file actually met the filing content requirements.

At this point, all firms – whether or not they rushed to meet the 2020 filing deadline – should have revisited Form CRS to ensure that it meets the technical criteria and content requirements, including links to other documents within Form CRS. Firms also should have documented appropriate delivery and, where there is a website, ensured that Form CRS is prominently posted with a working link.

If you are unsure of where your firm stands in terms of these requirements, please reach out to us at info@seccc.com. We are here to help!