Category: Alerts

Alaric Compliance Alert: SEC Adopts New Rules and Forms – Form CRS; Form ADV

The Securities and Exchange Commission (the “Commission” or the “SEC”) is adopting new rules and forms as well as amendments to its rules and forms, under both the Investment Advisers Act of 1940 (“Advisers Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) to require registered investment advisers and registered broker-dealers (together, “firms”) to provide a brief relationship summary to retail investors.

For purposes of Form CRS, “retail investor” is defined as “a natural person, or the legal representative of such natural person, who seeks to receive or receives services primarily for personal, family or household purposes.”

The relationship summary is intended to inform retail investors about:

  1. the types of client and customer relationships and services the firm offers;
  2. the fees, costs, conflicts of interest, and required standard of conduct associated with those relationships and services;
  3. whether the firm and its financial professionals currently have reportable legal or disciplinary history; and
  4. how to obtain additional information about the firm.

The relationship summary will also reference Investor.gov/CRS, a page on the Commission’s investor education website, Investor.gov, which offers educational information to investors about investment advisers, broker-dealers, and individual financial professionals and other materials.

Retail investors will receive a relationship summary at the beginning of a relationship with a firm, communications of updated information following a material change to the relationship summary, and an updated relationship summary upon certain events.

To provide adequate notice and opportunity to comply with the adopted relationship summary filing requirements, firms that are registered, or investment advisers who have an application for registration pending, with the Commission prior to June 30, 2020 will have a period of time beginning on May 1, 2020 until June 30, 2020 to file their initial relationship summaries with the Commission. On and after June 30, 2020, newly registered broker-dealers will be required to file their relationship summary with the Commission by the date on which their registration with the Commission becomes effective, and the Commission will not accept any initial application for registration as an investment adviser that does not include a relationship summary that satisfies the requirements of Form ADV, Part 3: Form CRS.

The relationship summary is subject to Commission filing and recordkeeping requirements.”1

The information provided in this Alert was published by the SEC, under the title, FORM CRS RELATIONSHIP SUMMARY; AMENDMENTS TO FORM ADV.

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Does your firm need assistance in implementing these rule changes? Call Alaric today to learn more about how we can help you at 1-888-243-2448 or info@alariccompliance.com.


1 Source: https://www.sec.gov/rules/final/2019/34-86032.pdf

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