The Securities and Exchange Commission has settled with 21 investment advisers and 6 broker-dealers on charges that they failed to timely file and deliver their client or customer relationship summaries (Form CRS).
According to a July 26 press release, none of the firms filed or delivered its Form CRS, or posted it to its website, until being reminded twice about the missed deadlines by SEC staff—in the case of investment advisers, by the SEC’s Division of Examinations, and in the case of broker-dealers, by FINRA.
The SEC announced last year that it intended to move forward with the regulatory package’s June 30, 2020 compliance date despite disruptions caused by the COVID-19 pandemic. Chairman Jay Clayton advised in that announcement that the Commission believes the June 30 date “remains appropriate,” given the extensive preparations that have taken place during the past year since the rulemaking was adopted on June 5, 2019.
Under those rules, the SEC not only required that SEC-registered investment advisers and SEC-registered broker-dealers file their respective Forms CRS with the SEC, but that they also begin delivering them to prospective and new retail investors by June 30, 2020 and to existing retail investor clients or customers by July 30, 2020. The SEC also required firms to prominently post their current Form CRS on their website. According to the SEC’s orders, each of the firms charged today missed those regulatory deadlines.
“Registration with the SEC as an investment adviser or broker-dealer comes with mandated filing and disclosure obligations,” said Gurbir S. Grewal, Director of the SEC’s Enforcement Division. “Today’s cases reinforce the importance of meeting those obligations and providing retail investors with information that is intended to help them understand their relationships with their securities industry professionals.”
“Form CRS is intended to provide retail investors with a brief summary about the services a firm offers, its fees, conflicts of interest, and other information that can help investors make more informed choices,” said Adam S. Aderton, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “By failing to file, deliver, and post this form, these firms deprived their clients and customers of the benefits of that information.”
Without admitting or denying the findings, the firms agreed to be censured, to cease and desist from violating the charged provisions, and to pay the following civil penalties:
- Altschuler, James Stephen, a Lexington, Massachusetts-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Canton Hathaway LLC, a Providence, Rhode Island-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Carmel Capital Management LLC, a Carmel, California-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Castle Wealth Planning LLC, a Santa Barbara, California-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Cohen Klingenstein LLC, a New York, New York-based investment adviser, has agreed to pay a $97,523 civil penalty.
- Dynamic Trading Management LLC, a White Plains, New York-based investment adviser, has agreed to pay a $10,000 civil penalty.
- Eastside Financial Advisors LLC, a Fayetteville, New York-based investment adviser, has agreed to pay a $10,000 civil penalty.
- Embree Financial Group Inc., a Chicago, Illinois-based investment adviser, has agreed to pay a $97,523 civil penalty.
- Harold Davidson & Associates Inc. a Los Angeles, California-based investment adviser, has agreed to pay a $25,000 civil penalty.
- John A. Bysko Associates, an Old Lyme, Connecticut-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Madden Funds Management Ltd., an Oak Park, Illinois-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Medallion Wealth Advisors LLC, a Farmington, Connecticut-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Mighty Oak Strong America Investment Company, a Mechanicsburg, Pennsylvania-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Minot DeBlois Advisors LLC, a Boston, Massachusetts-based investment adviser, has agreed to pay a $97,523 civil penalty.
- O’Brien Greene & Co. Inc., a Media, Pennsylvania-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Paratus Financial Inc., a Dallas, Texas-based investment adviser, has agreed to pay a $97,523 civil penalty.
- Quantitative Asset Management LLC, a Wayzata, Minnesota-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Sauberan & Company LLC, a Lockport, New York-based investment adviser, has agreed to pay a $10,000 civil penalty.
- Summit Financial Advisors Inc., a Lebanon, Ohio-based investment adviser, has agreed to pay a $25,000 civil penalty.
- The Cavanaugh Group Inc., a Towson, Maryland-based investment adviser, has agreed to pay a $50,000 civil penalty.
- Westbourne Investments Inc., an Alexandria, Virginia-based investment adviser, has agreed to pay a $25,000 civil penalty.
- Bill Parker Agency, a Sacramento, California-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- Birkelbach & Co., a Ponte Vedra Beach, Florida-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- Capital Portfolio Management Inc., a Timonium, Maryland-based broker-dealer, has agreed to pay a $25,000 civil penalty.
- Greentree Investment Services Inc., a Bridgeville, Pennsylvania-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- ST Invest LLC d/b/a Trade App, a San Antonio, Texas-based broker-dealer, has agreed to pay a $10,000 civil penalty.
- Tradier Brokerage Inc., a Charlotte, North Carolina-based broker-dealer, has agreed to pay a $50,000 civil penalty.
