Despite the SEC’s willingness to extend filing deadlines for Form ADV as a result of the COVID-19 pandemic, SEC Chairman Jay Clayton stated last week that the SEC will not grant an extension of the compliance date (June 30, 2020) for Regulation Best Interest (Reg BI) and the related filing of Form CRS.

In fact, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a Risk Alert today, April 7, 2020, to SEC-registered broker-dealers and investment advisers regarding the scope and content of examinations for Form CRS, almost three months before it needs to be filed.

The Risk Alert states that any SEC examinations conducted after June 30, 2020, “may include an assessment relating to Form CRS.” Following that statement is a comprehensive list of what staff “may focus on” in an examination, which includes:

  • Delivery and filing to both existing and new retail investors

  • Whether a firm’s Form CRS includes all required information

  • Whether or not it omits any material facts

  • Whether the Form CRS is formatted as required

  • Policies and procedures for updating filing and distributing updates and how changes are highlighted

  • How a firm makes and keeps records with its Form CRS, its filing, distribution, and updates.

In addition, the OCIE issued a second Risk Alert today to only SEC-registered broker-dealers about the scope and content of initial examinations after the compliance date for Reg BI. However, the SEC did issue an interpretation of Reg BI requirements for investment advisers, which could create additional compliance requirements for them and which I addressed in a prior article, “Regulation BI: A Clarification for Investment Advisers or an Enhanced Standard of Conduct?”

Cohen & Buckmann can help your investment adviser firm draft and file its Form CRS and provide advice with respect to your investment adviser compliance program. Contact us at lauri@cohenbuckmann.com.