The SEC recently proposed new rules under the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934 that would require registered investment advisers and registered broker-dealers to provide a brief customer- or client-relationship summary in a new short-form disclosure document: Form CRS. According to the SEC, Form CRS is intended to provide retail investors with simple, easy-to-understand information about the nature of their relationships with each investment professional and would supplement other, more detailed disclosures. Comments on the proposed new form must be submitted to the SEC over the next several months. This two-part series analyzes the proposed Form CRS requirements; discusses various issues the form raises; and provides insight from lawyers and compliance professionals on the proposal. This first article in the series provides an overview of the proposed Form CRS and its key requirements. The second article
will discuss whether the form is likely to achieve the SEC’s stated goal and explore potential issues it raises for SEC-registered investment advisers. For more on the SEC’s focus on retail investors, see “Retail Investors Top List of OCIE 2018 Exam Priorities
” (Mar. 8, 2018); and “Co-Director of SEC Enforcement Division Champions New Retail Strategy Task Force and Cyber Unit
” (Nov. 16, 2017).