SEC Staff Issues FAQs on Form CRS Disciplinary History Information Accompanied by a Joint Statement from Chairman Clayton and Division Directors
On October 8, 2020, the staff of the SEC’s Division of Investment Management and Division of Trading and Markets issued supplemental guidance on the disclosure of disciplinary history information on Form CRS in the form of additional Frequently Asked Questions. In addition, in connection with the publication of the additional FAQs, SEC Chairman Jay Clayton, Division of Investment Management Director Dalia Blass and Division of Trading and Markets Director Brett Redfearn issued a joint statement highlighting issues observed by the SEC staff regarding how firms have addressed the disciplinary history section in their Form CRS filings.
Form CRS is a brief relationship summary that broker-dealers and investment advisers (firms) are required to provide to retail investors that is designed to help retail investors make informed choices regarding what type of relationship—brokerage, investment advisory or a combination of both—best suits their particular needs and circumstances. It is also intended to allow retail investors to compare different firms’ services, fees and other important information. Firms were required to file their first Forms CRS with the SEC, and deliver the Form to new and prospective clients who are retail investors, by June 30, 2020.
In connection with the publication of the additional FAQs, SEC Chairman Jay Clayton, Division of Investment Management Director Dalia Blass and Division of Trading and Markets Director Brett Redfearn issued a joint statement highlighting issues observed by the SEC staff regarding how firms have addressed the disciplinary history section in their Form CRS filings.
Key takeaways from the additional FAQs are as follows:
- Form CRS requires inclusion of the heading “Do you or your financial professionals have legal or disciplinary history?” and a “Yes” or “No” response. If the response is “No,” firms are still required to include the heading and that response. It is not permissible for firms to omit the heading or the response.
- Firms may provide a separate “Yes” or “No” response to the above heading with respect to the firm and the firm’s financial professionals (e.g., “Firm – No”; “Financial Professionals – Yes”), but firms may not modify the heading to address only the firm’s disciplinary history.
- It is not permissible for firms to include additional information on Form CRS to explain the relevant disciplinary history.
The FAQs are available here, and the related joint statement is available here.
Vedder Thinking | Articles SEC Staff Issues FAQs on Form CRS Disciplinary History Information Accompanied by a Joint Statement from Chairman Clayton and Division Directors
Newsletter/Bulletin
November 10, 2020
On October 8, 2020, the staff of the SEC’s Division of Investment Management and Division of Trading and Markets issued supplemental guidance on the disclosure of disciplinary history information on Form CRS in the form of additional Frequently Asked Questions. In addition, in connection with the publication of the additional FAQs, SEC Chairman Jay Clayton, Division of Investment Management Director Dalia Blass and Division of Trading and Markets Director Brett Redfearn issued a joint statement highlighting issues observed by the SEC staff regarding how firms have addressed the disciplinary history section in their Form CRS filings.
Form CRS is a brief relationship summary that broker-dealers and investment advisers (firms) are required to provide to retail investors that is designed to help retail investors make informed choices regarding what type of relationship—brokerage, investment advisory or a combination of both—best suits their particular needs and circumstances. It is also intended to allow retail investors to compare different firms’ services, fees and other important information. Firms were required to file their first Forms CRS with the SEC, and deliver the Form to new and prospective clients who are retail investors, by June 30, 2020.
In connection with the publication of the additional FAQs, SEC Chairman Jay Clayton, Division of Investment Management Director Dalia Blass and Division of Trading and Markets Director Brett Redfearn issued a joint statement highlighting issues observed by the SEC staff regarding how firms have addressed the disciplinary history section in their Form CRS filings.
Key takeaways from the additional FAQs are as follows:
- Form CRS requires inclusion of the heading “Do you or your financial professionals have legal or disciplinary history?” and a “Yes” or “No” response. If the response is “No,” firms are still required to include the heading and that response. It is not permissible for firms to omit the heading or the response.
- Firms may provide a separate “Yes” or “No” response to the above heading with respect to the firm and the firm’s financial professionals (e.g., “Firm – No”; “Financial Professionals – Yes”), but firms may not modify the heading to address only the firm’s disciplinary history.
- It is not permissible for firms to include additional information on Form CRS to explain the relevant disciplinary history.
The FAQs are available here, and the related joint statement is available here.
