As the effective dates for Reg BI approach, we are starting to see more information and activity around certain aspects of the rule.  This includes some welcome FAQ’s around Form CRS.

On November 26, 2019 the staff of the Division of Investment Management and the Division of Trading and Markets released FAQs to help registrants prepare for the June 2020 deadline for Form CRS. Below is a summary of each of these FAQ’s and our thoughts:

Different Versions of Submission:  While SEC allows an investment advisor firm to create multiple versions of their Form ADV Part 2A brochure, they made it clear that they expect each firm to have one Form CRS which covers all business types.

“Machine Readable”:  The Commission kindly provided a little bit of IT help, clarifying that they expect firms to format their Form CRS headings in the same way you would format headings to create an index.

Delivery Requirements:  It’s ok to make your initial delivery as part of the delivery of information that the firm already provides, but make sure that it is delivered prominently.  If you use paper, make sure the Form CRS is the first page of your mailing.  If you send docs electronically, make sure the file (or link) is prominent.  We recommend overdoing it here – it would be a shame to go through all the time and effort to create a perfect Form CRS, and then have the commission object to it because a link wasn’t prominent enough.

PIV Managers:  If you are an investment advisor firm that manages Pooled Investment Vehicles (hedge funds, PE funds, VC funds), you are not required to deliver Form CRS to the funds since they are not retail investors.  That said, we expect to see Form CRS requested from your institutional investors’ Due Diligence teams; so, even if PIV management is your only business, it’s worth having a Form CRS draft teed up and ready to go.

Oyster Consulting has the knowledge and experience to support your efforts to comply with these rules.  To receive assistance with the preparation of policies and procedures or disclosure documents, or to receive training to ensure you understand the impact of these rules, please give us a call at (804) 965-5400 and we will put you in touch with our experts.