SEC Charges Firms for Missing Regulatory Deadlines

The Securities and Exchange Commission has charged 12 financial advisors and firms for failing to meet regulatory deadlines, the commission said Tuesday (Feb. 15).

At issue is something called the client or customer relationship summary — or Form CRS — which the firms and advisors were required to deliver to their retail investors by June 30, 2020.

The defendants in the case — six investment advisers and six broker-dealers — either failed to get the CRS to their clients on time, or failed to include enough information to satisfy Form CRS requirements. All defendants have agreed to settle the charges, the SEC said.

“With today’s actions, the SEC has now charged forty-two financial firms for failing to meet the obligations that are required to ensure retail investors understand their relationships with their securities industry professionals,” said Sanjay Wadhwa, deputy director of the SEC’s Enforcement Division.

The SEC adopted Form SEC in June of 2019, requiring SEC-registered investment advisers and SEC-registered broker-dealers to file their respective Forms CRS with the SEC and start delivering them to prospective, new and existing retail investors by June 30, 2020.

The commission also requires firms to post their current Form CRS in a prominent place on their website. The SEC said each of the firms missed those regulatory deadlines, or in some cases, “failed to include information and language specifically required for Form CRS.”

The 12 firms agreed to be censured, without admitting or denying the findings, and pay civil penalties that ranged from $10,000 to $25,000.

The sole exception was Wall Street Access, a New York, New York-based broker-dealer, which agreed to pay a $97,523 civil penalty.

The announcement came one day after the SEC charged BlockFi with failing to register the offers and sales of its retail crypto lending product.

Read more: BlockFi’s $100 Million Settlement With SEC Raises Internal Discussion

BlockFi has agreed to pay $100 million in penalties to settle the charges. It will also halt its unregistered offers and ensure the company complies with the provisions of the Investment Company Act in 60 days.

“This is the first case of its kind with respect to crypto lending platforms,” SEC Chair Gary Gensler said. “Today’s settlement makes clear that crypto markets must comply with time-tested securities laws.”