Broker-Dealer Fined for Failure to Deliver Form CRS

A broker-dealer settled FINRA charges for failing to timely deliver customer relationship summaries ("Form CRS") to retail customers and failing to have adequate written supervisory procedures to ensure compliance with Regulation Best Interest ("Reg BI").

In a Letter of Acceptance, Waiver and Consent, FINRA stated that the broker-dealer’s written supervisory procedures included requirements to deliver Form CRS, but did not provide directions for how the Form should be filed, delivered or updated. FINRA found that the broker-dealer ultimately failed to timely deliver Form CRS to 25 percent of its retail customers. In addition, FINRA stated that the broker-dealer’s written supervisory procedures offered only general background information and failed to (i) address Reg BI Care or Conflict of Interest Obligations or (ii) provide direction on how to correct violations of Reg BI.

As a result, FINRA concluded that the broker-dealer violated Exchange Act Rules 15l-1 ("Regulation Best Interest") and 17a-14 ("Form CRS, for preparation, filing and delivery of Form CRS") and FINRA Rules 3110 ("Supervision") and 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $35,000 fine.