SEC Charges 12 Additional Financial Firms for Failure to Meet Form CRS Obligations

The Securities and Exchange Commission today announced that six investment advisers and six broker-dealers have agreed to settle charges that they failed to file and deliver client or customer relationship summaries – known as Form CRS – to their retail investors by the required deadline and, in some cases, failed to include all information necessary to satisfy Form CRS requirements.

"With today’s actions, the SEC has now charged forty-two financial firms for failing to meet the obligations that are required to ensure retail investors understand their relationships with their securities industry professionals," said Sanjay Wadhwa, Deputy Director of the SEC’s Enforcement Division. "We urge firms that continue to be delinquent in fulfilling their Form CRS obligations to come into compliance with the law and to self-report to the SEC."

On June 5, 2019, the SEC adopted Form CRS and required SEC-registered investment advisers and SEC-registered broker-dealers to file their respective Forms CRS with the SEC, begin delivering them to prospective and new retail investors by June 30, 2020, and deliver them to existing retail investor clients or customers by July 30, 2020. The SEC also required firms to prominently post their current Form CRS on their website, if they had one. According to the SEC’s orders, each of the firms charged today missed those regulatory deadlines. In addition, the orders find that certain firms failed to include information and language specifically required for Form CRS.

The SEC’s orders find that the investment advisers violated Section 204 of the Investment Advisers Act of 1940 and Advisers Act Rules 204-1 and 204-5, and that the broker-dealers violated Section 17(a)(1) of the Securities Exchange Act of 1934 and Exchange Act Rule 17a-14.  Without admitting or denying the findings, each of the firms agreed to be censured, to cease and desist from violating the charged provisions, and to pay the following civil penalties:

• Arthur Zaske & Associates, LLC, a Bingham Farms, Michigan-based investment adviser, has agreed to pay a $15,000 civil penalty.
• Banyan Securities, LLC, a Greenbrae, California-based broker-dealer, has agreed to pay a $10,000 civil penalty.
• Church, Gregory, Adams Securities Corporation, a Decatur, Georgia-based broker‑dealer, has agreed to pay a $10,000 civil penalty.
• Gutt Financial Management, LLC, an Atlanta, Georgia-based investment adviser, has agreed to pay a $25,000 civil penalty.
• Hinsdale Associates, Inc., a Hinsdale, Illinois-based investment adviser, has agreed to pay a $25,000 civil penalty.
• J.K. Financial Services, Inc., a Norco, California-based broker-dealer, has agreed to pay a $10,000 civil penalty.
• N.V.N.G. Investments, Inc., a Kalamazoo, Michigan-based investment adviser, has agreed to pay a $15,000 civil penalty.
• Personal Financial Planning, Inc., a Deerfield, Illinois-based investment adviser, has agreed to pay a $25,000 civil penalty.
• Stone Run Capital, LLC, a New York, New York-based investment adviser, has agreed to pay a $25,000 civil penalty.
• The Winning Edge Financial Group, Inc., a Clifton, New Jersey-based broker-dealer, has agreed to pay a $10,000 civil penalty.
• Wall Street Access, a New York, New York-based broker-dealer, has agreed to pay a $97,523 civil penalty.
• Watermark Securities, Inc., a New York, New York-based broker-dealer, has agreed to pay a $25,000 civil penalty.

On July 26, 2021, the SEC announced settlements with 27 other financial firms for similar failures to timely file and deliver their Forms CRS to their retail investors. https://www.sec.gov/news/press-release/2021-139. Three other investment advisers subsequently settled with the SEC in separate administrative proceedings:  Disciplined Capital Management LLC; Lexicon Capital Management LP; and Newman Ladd Capital Advisors, LLC. 

The SEC’s investigations of investment advisers were conducted by Anthony J. Winter of the Atlanta Regional Office and Stephen E. Donahue of the Enforcement Division’s Asset Management Unit and Atlanta Regional Office, Som P. Dalal and Anne C. McKinley of the Chicago Regional Office, and Sheldon Mui and Gerald A. Gross of the New York Regional Office. The SEC’s investigations of broker-dealers were conducted by Yael Berger, Elisabeth Grimm, Kelly V. Silverman, and Stacy L. Bogert of the Home Office. The compliance examinations that led to the investment adviser investigations were conducted by staff of the SEC’s Division of Examinations. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

More About This Topic

• SEC Investor Bulletin: Relationship Summaries (Form CRS or Form ADV) - https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins
• SEC Spotlight: Regulation Best Interest, Form CRS, and Related Interpretations - https://www.sec.gov/regulation-best-interest