The Securities and Exchange Commission has settled with six investment advisers and six broker-dealers over charges that they failed to file and deliver their client or Form CRS customer relationship summaries.
In some cases, the firms also failed to include all the information necessary to satisfy their Form CRS requirements, the SEC notes in its Feb. 15 announcement.
“With today’s actions, the SEC has now charged 42 financial firms for failing to meet the obligations that are required to ensure retail investors understand their relationships with their securities industry professionals,” stated Sanjay Wadhwa, Deputy Director of the SEC’s Enforcement Division. “We urge firms that continue to be delinquent in fulfilling their Form CRS obligations to come into compliance with the law and to self-report to the SEC.”
According to the SEC’s orders, each of the firms charged missed regulatory deadlines to either file their respective Form CRS with the SEC, begin delivering them to prospective and new retail investors by June 30, 2020, or deliver them to existing retail investor clients by July 30, 2020. In addition, the orders find that certain firms failed to include information and language specifically required for Form CRS.
The compliance examinations that led to the investment adviser investigations were conducted by staff of the SEC’s Division of Examinations, along with assistance from FINRA.
Without admitting or denying the findings, each of the firms agreed to be censured, to cease and desist from violating the charged provisions, and to pay the following civil penalties:
- Arthur Zaske & Associates, LLC, a Michigan-based investment adviser, has agreed to pay a $15,000 civil penalty.
- Banyan Securities, LLC, a California-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- Church, Gregory, Adams Securities Corporation, a Georgia-based broker‑dealer, has agreed to pay a $10,000 civil penalty.
- Gutt Financial Management, LLC, a Georgia-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Hinsdale Associates, Inc., an Illinois-based investment adviser, has agreed to pay a $25,000 civil penalty.
- J.K. Financial Services, Inc., a California-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- N.V.N.G. Investments, Inc., a Michigan-based investment adviser, has agreed to pay a $15,000 civil penalty.
- Personal Financial Planning, Inc., an Illinois-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Stone Run Capital, LLC, a New York-based investment adviser, has agreed to pay a $25,000 civil penalty.
- The Winning Edge Financial Group, Inc., a New Jersey-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- Wall Street Access, a New York-based broker-dealer, has agreed to pay a $97,523 civil penalty.
- Watermark Securities, Inc., a New York-based broker-dealer, has agreed to pay a $25,000 civil penalty.
In July 2021, the SEC announced settlements with 27 other financial firms for similar failures to timely file and deliver their Forms CRS to their retail investors.
In addition, three investment advisers—Disciplined Capital Management LLC; Lexicon Capital Management LP; and Newman Ladd Capital Advisors, LLC—subsequently settled with the SEC in separate administrative proceedings.
