The SEC's Division of Investment Management and Division of Trading and Markets issued new responses to FAQs providing guidance on the scope of Form CRS requirements and obligations to communicate relationship summary changes to existing retail investor clients.
On March 5, 2021, the SEC's Division of Investment Management and Division of Trading and Markets (the Staff) updated their frequently asked questions (FAQs) on Form CRS. Specifically, the new responses to FAQs address:
The scope of Form CRS requirements.
Amendments to the relationship summary.
Scope of Form CRS Requirements
The Staff clarified that firms that do not meet the definition of "dual registrant" in Form CRS Instruction 11.C. may not prepare and file a single relationship summary as a dual registrant. In addition, affiliates should file a single relationship summary only where each affiliated entity has an SEC filing obligation. However, firms may acknowledge other financial services they provide so long as the presentation of such services does not obscure or impede understanding of the information required to be in included in the relationship summary.
Amendments to the Relationship Summary
The Staff also clarified the obligation to communicate changes to relationship summaries to retail investors that are existing clients under General Instruction 8. If a firm makes material changes and refiles its relationship summary under General Instruction 8.A., the firm must also communicate the changes to retail investors that are current clients within 60 days, as required by General Instruction 8.B.. Firms may choose to do so by:
Delivering an amended relationship summary, with recent changes highlighted or otherwise marked in a manner that is readily distinguishable from other text in the relationship summary. The additional disclosure showing revised text or summarizing the material changes must be attached as an exhibit to the unmarked amended relationship summary, as required by General Instruction 8.C..
Communicating the information through another disclosure (such as an amended Form ADV summary of material changes or an account statement) that is delivered to the retail investor.
If a firm only makes non-material changes to its relationship summary, the obligation to communicate the changes and deliver an amended relationship summary to existing retail investor clients is not triggered.
In addition, firms must still post the current version of the relationship summary on their website pursuant to General Instruction 10, and deliver the current version to prospective, new, or existing retail customer clients when required by General Instructions 7 and 9. Broker-dealers and investment advisers must also maintain copies of all versions of their relationship summaries, including versions incorporating non-material changes.
Resource ID w-030-0283Document Type Legal update: archive
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