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Thompson Hine LLP, a full-service business law firm with approximately 400 lawyers in 8 offices, was ranked number 1 in the category “Most innovative North American law firms: New working models” by The Financial Times and was 1 of 7 firms shortlisted for The American Lawyer’s inaugural Legal Services Innovation Award. The firm has been recognized by the National Law Journal as a Legal Technology Trailblazer and featured by Bloomberg for its innovative service delivery models, which drive accuracy and predictability. The firm’s commitment to innovation is embodied in Thompson Hine SmartPaTHTM – a smarter way to work – predictable, efficient and aligned with client goals. For more information, please visit ThompsonHine.com and ThompsonHine.com/SmartPaTH.

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On April 7, 2020, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued two risk alerts announcing that regulatory exams occurring after the compliance date for <a href="https://www.sec.gov/files/Risk%20Alert%20-%20Form%20CRS%20Exams.pdf" target="_blank" rel="noopener">Form CRS</a> and <a href="https://www.sec.gov/files/Risk%20Alert-%20Regulation%20Best%20Interest%20Exams.pdf" target="_blank" rel="noopener">Regulation Best Interest (Reg BI)</a>, June 30, 2020, will assess how well firms have implemented policies and procedures to ensure compliance with those new requirements.

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As we discussed in a <a href="https://www.thompsonhine.com/publications/sec-adopts-regulation-best-interest-and-other-measures-for-broker-dealers-and-investment-advisers" target="_blank" rel="noopener">prior client alert</a>, investment advisers and brokers serving retail clients will soon be required to file and deliver to clients a client relationship summary on Form CRS that outlines key aspects of the firm’s services. In addition, Reg BI, which requires that brokers put their retail customers’ best interests ahead of their own financial interests when making investment recommendations, will require brokers to comply with specific disclosure, care, conflict of interest and compliance obligations.

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In the risk alerts, OCIE confirms that initial examinations of brokers and advisers occurring after the compliance date will:

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Importantly, OCIE also discusses with some particularity how the staff anticipates assessing compliance with Form CRS and Reg BI. It notes specific questions the staff may ask, what documents may be requested and what disclosures the staff might expect to see. Firms required to comply with Form CRS and/or Reg BI should review the guidance provided in the risk alerts and evaluate whether they need to update their anticipated compliance processes.

We will review any additional guidance released on Form CRS and Reg BI compliance and keep you informed. Please don’t hesitate to reach out to us with questions regarding the new requirements.

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Craig A. Foster 614.469.3280 <a href="mailto:Craig.Foster@ThompsonHine.com">Craig.Foster@ThompsonHine.com</a>

This advisory bulletin may be reproduced, in whole or in part, with the prior permission of Thompson Hine LLP and acknowledgment of its source and copyright. This publication is intended to inform clients about legal matters of current interest. It is not intended as legal advice. Readers should not act upon the information contained in it without professional counsel.

This document may be considered attorney advertising in some jurisdictions.

https://admin.thompsonhine.com/wp-content/uploads/2022/04/Investment_Management_Update_-_SEC_Announces_Exam_Focus_on_Compliance_with_Form_CRS_and_Regulation_Best_Interest.pdf

SEC Announces Exam Focus on Compliance with Form CRS and Regulation Best Interest

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