The deadline by which SEC-registered investment advisers and SEC-registered broker-dealers are required to file Form CRS with the SEC and deliver the Form to retail investors is quickly approaching.
As described in our Client Alert last summer, the Securities and Exchange Commission adopted a rulemaking package on June 5, 2019, that included a new disclosure requirement – Form CRS. Firms registered with the SEC prior to June 30, 2020, must file the Form with the SEC no later than June 30, 2020. On and after that date, firms with pending registrations must file their Form CRS along with their registration application.
With respect to new and prospective retail investors, investment advisers must initially deliver Form CRS before, or at the time that, an investment advisory agreement is entered into by the parties. As described in our previous article, broker-dealers must initially deliver the Form before or at the earliest of: (1) a recommendation of an account type, a securities transaction, or an investment strategy involving securities, (2) placing an order for the retail investor, or (3) the opening of a brokerage account for the retail investor. Form CRS must also be delivered at the earliest of these events if a firm is dually-registered or an affiliated broker-dealer and investment adviser jointly offer their services.
For retail investors who already have a brokerage or advisory account, Form CRS must be provided within 30 days after the date by which the investment adviser or broker-dealer is required to file the Form with the SEC (i.e., by July 30, 2020).
The SEC provides information, instructions, and FAQs regarding Form CRS on its website that investment advisers and broker-dealers may find helpful in understanding and creating their required disclosures.
This blog post was drafted by Beth Miller, an attorney in the Spencer Fane LLP Overland Park, KS office. For more information, visit spencerfane.com.
