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Industry Spotlight > Broker Dealers

SEC Releases Updated FAQ on Form CRS

By Melanie Waddell

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The Securities and Exchange Commission updated Friday its frequently asked questions guidance on Form CRS, which advisors and broker-dealers must file with the agency by Tuesday.

Along with details on where to file Form CRS, the FAQ provides updates on questions related to broker-dealers as well as dual registrants.

The agency states, for instance, that a registered broker-dealer with no retail investors is not required to file a Form CRS.

Another question asked about dual registrant filing requirements.

Question: Firm A is an investment adviser that is not affiliated with Firm B, a broker-dealer. Some financial professionals are dually licensed as investment adviser representatives with Firm A and as registered representatives with Firm B. Would both Firm A and Firm B be required to deliver their relationship summary to retail investors seeking or obtaining services from these dually licensed financial professionals?

Answer: Unaffiliated firms are treated as standalone broker-dealers and standalone investment advisers, each with an independent responsibility to create and deliver its own relationship summary. If a dually licensed financial professional offers services to retail investors through both firms, to the extent a delivery obligation is triggered, retail investors generally should receive both firms’ relationship summaries. However, each firm should evaluate the nature of its relationships with retail investors to determine its distinct delivery obligations.

Another question centered on when a new relationship summary would need to be delivered to a retail investor.

Question: If a retail investor client of a dually registered firm elects to convert an investment advisory account to a brokerage account, must the firm deliver a new relationship summary to the retail investor? The firm already provided the retail investor with a relationship summary describing both its brokerage and advisory services when the retail investor opened the account.

Answer: Yes, the firm would have to deliver a new relationship summary. Opening a new account that is different from the retail investor’s existing account triggers delivery of the relationship summary — even if the converted account does not have a different name or account number.

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Melanie Waddell

@Think_MelanieW

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