27 Financial Firms Settle SEC Charges Over Form CRS Filing and Delivery Failures

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A total of 27 financial firms (21 investment advisors and 6 broker-dealers) agreed to pay civil penalties to settle the charges filed against them by the Securities and Exchange Commission (SEC).

The compliance examinations into financial firms conducted by the SEC Division of Examinations led to investigations by the Enforcement Division‘s Asset Management Unit. Following the investigations, the commission charged 27 financial firms for failing to timely file their client or customer relationship summaries (Form CRS) and failing to deliver them to their retail investor clients.

On June 5, 2019. the SEC adopted Regulation Best Interest to improve the quality and transparency of the relationships of registered investment advisors and broker-dealer with their clients.

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Under Reg BI, registered investment advisers and broker-dealers are required to follow a variety of new rules and obligations including filing Form CRS to the SEC and delivering a copy to their prospective, new, and existing clients.

The Commission’s purpose for the Form CRS requirement is to ensure that registered broker-dealers and investment advisers are placing their clients’ best interests ahead of their own.

The SEC required registered investment advisers and broker-dealers to begin delivering their Form CRS to prospective and new clients by June 30, 2020, and to their existing clients by July 30, 2020. The Commission also required them to prominently post their current Form CRS on their websites.

The Enforcement Division’s Asset Management Unit’s investigations found that 27 financial firms missed the regulatory deadlines. None of the 27 financial firms filed or delivered its Form CRS or posted it to its websites, according to the SEC.

The SEC filed charges against the 27 financial firms, which each agreed to settle by paying civil penalties. The firms also agreed to be censured, to cease and desist from violating the charged provisions.

In a statement, SEC Enforcement Division Director Gurbir Grewal said, “Registration with the SEC as an investment adviser or broker-dealer comes with mandated filing and disclosure obligations. 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.”

27 financial firms penalized for failing to file and deliver Form CRS

  • Altschuler, James Stephen, a Lexington, Massachusetts-based investment adviser,  to pay a $25,000 civil penalty.
  • Canton Hathaway LLC, a Providence, Rhode Island-based investment adviser,  to pay a $25,000 civil penalty.
  • Carmel Capital Management LLC, a Carmel, California-based investment adviser,   to pay a $25,000 civil penalty.
  • Castle Wealth Planning LLC, a Santa Barbara, California-based investment adviser,  to pay a $25,000 civil penalty.
  • Cohen Klingenstein LLC, a New York, New York-based investment adviser, to pay a $97,523 civil penalty.
  • Dynamic Trading Management LLC, a White Plains, New York-based investment adviser, to pay a $10,000 civil penalty.
  • Eastside Financial Advisors LLC, a Fayetteville, New York-based investment adviser,  to pay a $10,000 civil penalty.
  • Embree Financial Group Inc., a Chicago, Illinois-based investment adviser, to pay a $97,523 civil penalty.
  • Harold Davidson & Associates Inc. a Los Angeles, California-based investment adviser,  to pay a $25,000 civil penalty.
  • John A. Bysko Associates, an Old Lyme, Connecticut-based investment adviser, to pay a $25,000 civil penalty.
  • Madden Funds Management Ltd., an Oak Park, Illinois-based investment adviser, to pay a $25,000 civil penalty.
  • Medallion Wealth Advisors LLC, a Farmington, Connecticut-based investment adviser,  to pay a $25,000 civil penalty.
  • Mighty Oak Strong America Investment Company, a Mechanicsburg, Pennsylvania-based investment adviser, to pay a $25,000 civil penalty.
  • Minot DeBlois Advisors LLC, a Boston, Massachusetts-based investment adviser, to pay a $97,523 civil penalty.
  • O’Brien Greene & Co. Inc., a Media, Pennsylvania-based investment adviser, to pay a $25,000 civil penalty.
  • Paratus Financial Inc., a Dallas, Texas-based investment adviser,  to pay a $97,523 civil penalty.
  • Quantitative Asset Management LLC, a Wayzata, Minnesota-based investment adviser,  to pay a $25,000 civil penalty.
  • Sauberan & Company LLC, a Lockport, New York-based investment adviser, to pay a $10,000 civil penalty.
  • Summit Financial Advisors Inc., a Lebanon, Ohio-based investment adviser,  to pay a $25,000 civil penalty.
  • The Cavanaugh Group Inc., a Towson, Maryland-based investment adviser,  to pay a $50,000 civil penalty.
  • Westbourne Investments Inc., an Alexandria, Virginia-based investment adviser,  to pay a $25,000 civil penalty.
  • Bill Parker Agency, a Sacramento, California-based broker-dealer,  to pay a $10,000 civil penalty.
  • Birkelbach & Co., a Ponte Vedra Beach, Florida-based broker-dealer, to pay a $10,000 civil penalty.
  • Capital Portfolio Management Inc., a Timonium, Maryland-based broker-dealer, to pay a $25,000 civil penalty.
  • Greentree Investment Services Inc., a Bridgeville, Pennsylvania-based broker-dealer,  to pay a $10,000 civil penalty.
  • ST Invest LLC d/b/a Trade App, a San Antonio, Texas-based broker-dealer,  to pay a $10,000 civil penalty.
  • Tradier Brokerage Inc., a Charlotte, North Carolina-based broker-dealer, to pay a $50,000 civil penalty.