SEC Charges 21 Investment Adviser Firms for Form ADV Part 3 Filing and Delivery Failures

August 02, 2021

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The SEC fines Investment Advisers for failing to deliver and file Form CRS, also known as Form ADV Part 3

Seal of the SEC
On July 26, 2021, the Securities and Exchange Commission (“SEC”) announced that 21 investment advisers agreed to settle charges that they failed to file and deliver their CRS Relationship Summary, also known as Form ADV Part 3, to their retail investors. Click here to read the SEC’s full announcement.

Adopted by the SEC in June 2019,  the Form CRS/Form ADV Part 3 relationship summary is designed to be a written disclosure that provides retail investors with succinct information about the relationships and services the firm offers to retail investors, fees and costs that retail investors will pay, specified conflicts of interest and standards of conduct, and disciplinary history.

SEC-registered investment advisers were required to file their initial Form CRS/Form ADV Part 3 no later than June 30, 2020 and to deliver a copy to existing clients no later than July 30, 2020. The SEC found that each of the 21 investment advisers included in its announcement failed to file or deliver the Form ADV Part 3 even after being reminded of their obligation by the SEC’s Division of Examinations (“EXAMS”).

In each case, EXAMS contacted the investment adviser firm in October 2020 with a reminder to file the Form ADV Part 3 and contacted the firm again in early 2021 to announce an examination related to the failure to file Form ADV Part 3/Form CRS. None of the 21 RIA firms filed or delivered the Form CRS, or posted it to its website, until after a formal examination had been initiated.

Each of the 21 investment adviser firms agreed to pay a civil penalty ranging between $10,000 and $97,523. These actions highlight the SEC’s current focus on Form CRS/Form ADV Part 3 compliance, as well as the importance for investment adviser firms to quickly respond to inquiries and communications received from the SEC.

Form ADV Part 3/Form CRS Resources

RIA Compliance Consultants has developed a Form ADV Part 3 Comprehensive Compliance Package which includes the drafting and filing of your Form CRS/Form ADV Part 3 by one of our Senior Compliance Consultants, our Form ADV Part 3 Compliance Manual Update Section, our Form ADV Part 3 Compliance Review Tool Module, and Form ADV Part 3 Training materials, available here.  Also available a la carte are several Form ADV Part 3 sample compliance form and training materials, including the Sample WSP/CoE Section: Form ADV Part 3Form ADV Part 3 – Compliance Review ModuleForm ADV – Part 3 – Conversation Starters ScriptForm ADV Part 3 – Training Tool,  Form ADV Part 3 – Relationship Summary Delivery LogRecorded Webinar: Compliance with Form ADV Part 3 Requirements, and Form ADV – Part 3 – Cover Letters for Relationship Summary.

Contact Us

If your investment adviser firm is an existing client of RIA Compliance Consultants and would like assistance reviewing its Form CRS/Form ADV Part 3, developing customized policies and procedures, and/or implementing compliance testing for the Form CRS/Form ADV Part 3, we encourage you to speak with your compliance consultant. Or, if you are not an existing client of RIA Compliance Consultants, click here to set up an introductory call with our Business Development Team.

Related Posts

FAQs on Form ADV Part 3 

SEC Updates Form ADV Part 3/CRS FAQs for Investment Advisers – March 22, 2021

SEC Announces 2021 Examination Priorities for RIAs – March 15, 2021

SEC Roundtable on Regulation Best Interest and Form CRS – November 10, 2020

SEC Issues Joint Statement on New FAQs Focusing on Disciplinary Disclosures for Form CRS/Form ADV Part 3 – November 2, 2020

Investment Advisers Disclosing Disciplinary Events on Form ADV Part 3 – September 22, 2020

SEC Publishes New Website for Main Street Investors – June 22, 2020

Oklahoma Withdraws Requirement for State Registered Investment Advisers to File Form ADV Part 3 – June 20, 2020

Form CRS/Form ADV Part 3 Testing for Compliance – June 18, 2020

Form ADV Part 3 Conversation Starters – June 16, 2020

Form CRS/Form ADV Part 3 Filing and Delivery – June 05, 2020

Updating Your Investment Adviser’s Compliance Manual for the New Form ADV Part 3 – May 26, 2020

Drafting Tips for ADV Part 3/Form CRS – May 20, 2020

Drafting Tips for Form ADV Part 3/Form CRS – May 01, 2020

Posted by RCC
Labels: Enforcement, Examination, Form ADV, Form CRS, Form CRS Relationship Summary, SEC
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