The Securities and Exchange Commission has released updated frequently asked questions guidance on the customer relationship summary, or Form CRS, that zeroes in on disclosing a firm’s disciplinary history.
The Wall Street Journal found in late summer that at least 1,300 brokerage and financial advisory firms incorrectly stated on the form that neither they nor their financial professionals had legal or disciplinary histories.
In a joint statement, SEC Chairman Jay Clayton along with Dalia Blass, head of the Investment Management Division, and Brett Redfearn, director of the Trading and Markets Division, state that after reviewing Form CRS filings by the agency’s Standards of Conduct Implementation Committee, they observed examples of relationship summaries where firms did not provide a response in the disciplinary history section.
“Importantly, a firm must report disciplinary history in its relationship summary if that history already must be reported on other forms,” the three said in their statement.
“Firms do not have discretion to leave the answer blank or to omit reportable disciplinary history from the relationship summary. Firms should review their reportable disciplinary history and that of their financial professionals to ensure that their relationship summaries are accurate, complete and consistent with those other forms,” the statement continues.