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3. Deficient Form CRS filings

Regulation and Compliance > Federal Regulation

SEC Fines Another Advisory Firm for Form CRS Failures

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What You Need to Know

  • Adirondack Financial Services Corp. missed deadlines to file a Form CRS and post the form on its website.
  • The firm complied when the SEC said it was going to conduct an exam relating to the firm’s failure to file the form.
  • More than 30 firms have settled Form CRS-related charges with the SEC since July 2021.

The Securities and Exchange Commission has slapped another advisory firm for Form CRS infractions.

On Monday, the SEC said that Adirondack Financial Services Corp. must pay a $25,000 civil money penalty for failing to file by the regulatory deadline Form CRS, the customer relationship summary, with the commission and post the form on its website. AFSC is a New York corporation with its principal place of business in Utica, New York.

AFSC was required to file its initial Form CRS with the SEC as Part 3 of its Form ADV and post the form on its website by June 30, 2020.

The firm failed to file its Form CRS by the deadline, not becoming compliant until March 2021, according to the SEC, and failed to post its Form CRS on its website until April 2021.

“As a result, AFSC willfully violated Advisers Act Section 204 and Rules 204-1 and 204-5 thereunder,” the agency states.

In February, six investment advisors and six broker-dealers agreed to settle charges related to failing to file and deliver a customer relationship summary — or Form CRS — to their retail clients.

In July 2021, the SEC announced settlements with 27 other financial firms for similar failures to timely file and deliver their Forms CRS to retail investors.

AFSC has been registered with the SEC as an investment adviser since Oct. 3, 2005.

In its Form ADV dated March 31, 2022, AFSC reported approximately $420 million in regulatory assets under management and at least 376 individual clients.

SEC Rule 204-5(b)(3) requires retail RIAs to post their current Form CRS prominently on their website, if they have one, in a location and format that is easily accessible to retail investor clients.

AFSC “failed to comply with the Requirements by the regulatory deadlines, and began complying only after the Division of Examinations contacted the firm regarding the failure to file its Form CRS,” the SEC said in a statement.

Specifically, the Division of Exams contacted AFSC’s Chief Compliance Officer by email on Oct. 14, 2020, to alert the CCO that the firm had failed to file Form CRS, the SEC said.

“AFSC, however, still did not file its Form CRS at that time,” the agency said.

On Feb. 17, 2021, the exam division “again contacted AFSC but this time to announce an examination relating to the firm’s failure to file Form CRS,” the complaint states. “AFSC finally filed Form CRS with the Commission on March 31, 2021.”