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February 15, 2022 at 01:14 PM
Related: 6 Top Reg BI Compliance Failures: FINRA
Just before Christmas, the Securities and Exchange Commission issued sweeping guidance on its new customer relationship summary form, known as Form CRS, pointing to many disclosure aspects of the rule where advisors are falling short.
On Feb. 9, the Financial Industry Regulatory Authority followed suit by releasing its 2022 exam report detailing initial exam findings for compliance with Form CRS by broker-dealers — and citing numerous deficiencies.
Along with Regulation Best Interest, the customer relationship summary, or Form CRS, became effective on June 30, 2020, and 2021 marked the first full calendar year in which FINRA examined how broker-dealers have implemented the rule.
BDs, RIAs and dually registered firms all must file a Form CRS. The “dual registrants” definition does not apply to a firm that is SEC-registered BD and an affiliated state-registered RIA. State-registered RIAs are not covered by the SEC’s rule on Form CRS (unless the state has adopted a similar rule).
For SEC-registered RIAs, Form CRS is referred to as ADV Part 3, for purposes of filing.
See the gallery for six primary areas where FINRA says broker-dealers are falling short in their compliance with Form CRS.
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