SEC Charges and Fines 12 More Firms for Failing to Meet Form CRS Obligations
The Securities and Exchange Commission reported that six registered investment advisers and six broker-dealers have agreed to settle charges that they failed to file and deliver client or customer relationship summaries.
The Securities and Exchange Commission reported that six registered investment advisers and six broker-dealers have agreed to settle charges that they failed to file and deliver client or customer relationship summaries – known as Form CRS – to their retail investors by the required deadline and, in some cases, failed to include all of the information necessary to satisfy Form CRS requirements. The SEC has now charged 42 financial firms for failing to meet the obligations.
“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,” said Sanjay Wadhwa, deputy director of the SEC’s enforcement division.
RIAs and broker-dealers were required deliver their Form CRS to prospective and new retail investors by June 30, 2020, and to existing investors by July 30, 2020. The SEC also requires firms to prominently post the form on their website, if they had one.
According to the SEC, each of the charged firms missed those regulatory deadlines, while certain firms failed to include information and language specifically required for Form CRS.
- Arthur Zaske & Associates, a Michigan-based investment adviser, has agreed to pay a $15,000 civil penalty.
- Banyan Securities, a California-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- Church, Gregory, Adams Securities Corporation, a Georgia-based broker‑dealer, has agreed to pay a $10,000 civil penalty.
- Gutt Financial Management, a Georgia-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Hinsdale Associates, an Illinois-based investment adviser, has agreed to pay a $25,000 civil penalty.
- J.K. Financial Services, a California-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- N.V.N.G. Investments, a Michigan-based investment adviser, has agreed to pay a $15,000 civil penalty.
- Personal Financial Planning, an Illinois-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Stone Run Capital, a New York-based investment adviser, has agreed to pay a $25,000 civil penalty.
- The Winning Edge Financial Group, a New Jersey-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- Wall Street Access, a New York-based broker-dealer, has agreed to pay a $97,523 civil penalty.
- Watermark Securities, a New York-based broker-dealer, has agreed to pay a $25,000 civil penalty.
In July 2021, the SEC announced settlements with 27 other financial firms for similar failures to timely file and deliver their Forms CRS to their retail investors.
Three other investment advisers subsequently settled with the SEC in separate administrative proceedings: Disciplined Capital Management LLC, Lexicon Capital Management LP, and Newman Ladd Capital Advisors LLC.
In related news, the Financial Industry Regulatory Authority reported its initial findings of its review of the SEC’s Regulation Best Interest and Form CRS over the past year.
