{"id":6489,"date":"2020-05-12T11:50:54","date_gmt":"2020-05-12T16:50:54","guid":{"rendered":"https:\/\/rixtrema.com\/blog\/?p=6489"},"modified":"2020-11-11T11:01:13","modified_gmt":"2020-11-11T16:01:13","slug":"5-components-to-the-form-crs-examinations","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/5-components-to-the-form-crs-examinations\/","title":{"rendered":"5 Components To The Form CRS Examinations"},"content":{"rendered":"\n
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  1. What is the OCIE expecting by June 30th?<\/a><\/li>
  2. 5 Compliance Components in the Form CRS Examinations<\/a><\/li>
  3. There\u2019s a lot more to learn about the CRS Form<\/a><\/li><\/ol>\n\n\n\n
    <\/div>\n\n\n\n

    Form CRS may be the most challenging hurdle for Registered Investment Advisors and Broker-Dealers. Small firms, especially, may struggle to meet the Customer Relationship Summary because they do not have internal compliance offices to build the 2-page document. The SEC knows that most small firms need to consult outside compliance firms and expect the CRS Form, alone, to take around 23 hours to build and cost $6,000.<\/p>\n

    I wrote before about why Form CRS will be a difficult hurdle<\/a><\/u>, and I don\u2019t want to belabor the point. But, it is becoming more urgent to reach compliance before the June 30th, 2020 deadline. As they state in their April Risk Alert on Form CRS<\/a><\/u>, the SEC has no intention to push the Regulation Best Interest deadline because of the Coronavirus or Pandemic Shutdown.<\/p>\n\n\n\n

    What is the OCIE expecting by June 30th?<\/strong><\/h2>\n\n\n\n

    Form CRS and its related rules require firms to prepare and deliver a 2-page summary (4-pages for dual registrants) of the relationship between the retail investor and the firm. Don\u2019t forget to file it too! BDs and RIAs must file their relationship summaries (with amendments) using the Central Registration Depository (\u201cWeb CRD\u201d) or Investment Advisor Registration Depository (\u201cIARD\u201d). Firms also need to publish the CRS Form on their website if they have one.<\/p>\n

     Just like the other Reg-BI requirements, the OCIE intends to examine firms\u2019 compliance after the June 30th deadline. I wrote a concise article outlining those expectations<\/a>,<\/u> and one thing remains consistent for Form CRS. The first examination assesses \u201cwhether firms have made a good faith effort to implement Form CRS.\u201d Now, that first assessment may have a relatively low bar, but I think it\u2019s reasonable to assume that the later reviews may be more strict.<\/p>\n\n\n\n

    5 Compliance Components in the Form CRS Examinations<\/strong><\/h2>\n\n\n\n

    1.Delivery and Filing: <\/strong>(This is the most lengthy part of the examination, but stay with me here.) <\/p>\n

    First, the SEC Staff will review whether your firm filed its CRS Form and any amendments and posted it on your website if you have one. Second, they will evaluate how your firm plans to deliver the summary to your existing and new retail investors. Third, they will review all your policies and procedures to make sure that they include updating and delivery procedures for the CRS Form. The SEC wants explicitly dates to validate when the firm delivers each CRS Form to every retail investor.<\/p>\n

                The expectations<\/p>\n

    Existing Retail Investors: <\/em>Every firm needs to deliver a CRS Form to their current clients by July 30th, 2020. That\u2019s 30 days after the Form must be filed (June 30th, 2020). The Form must also be delivered before or when:<\/p>\n