On June 5, 2019, the Securities and Exchange Commission ("SEC") finalized a new rule that includes a new requirement for SEC-registered investment adviser ("RIA") firms to provide a brief relationship summary to retail investors known as the Form CRS. As originally proposed, the new Form ADV Part 3 ("Form CRS") would have been a highly prescriptive four page document with eight sections. However, the new finalized Form CRS is a somewhat prescriptive two page document with five mandated sections:
- Relationship and Services
- Fees, Costs, Conflicts, and Standard of Conduct
- Disciplinary History
- Additional Information
In general, the final version of the Form CRS highlights the SEC’s preference to apply the concept of “layered disclosure” which leans heavily on the increased use of hyperlinks and other cross-references to more detailed disclosure.