FINRA Fines Firm $30K for Form CRS Failures

The Financial Industry Regulatory Authority has censured and fined G.research $30,000 for failing to disclose on its Form ADV the firm’s legal or disciplinary history.

From June 30, 2020, to May 1, 2023, G.research failed to disclose its own as well as its control affiliates' disciplinary history in its customer relationship summary, or Form CRS.

The firm, located in Rye, New York, has 19 registered reps and acts as an agent in transactions of managed accounts directed by an affiliated investment advisory business. The firm also offers self-directed brokerage accounts to customers of its affiliated investment advisory business.
G.research and four of its control affiliates had prior reportable legal or disciplinary history, FINRA’s order states.

“However, G.research did not respond ‘Yes’ or direct retail investors to Investor.gov/CRS in response to the question concerning legal or disciplinary history on the Form CRS it filed on June 30, 2020, or on its amended Form CRS filed on April 14, 2022,” the order states.
On May 1, 2023, “the firm filed an amended Form CRS that responded ‘Yes’ to the question concerning legal or disciplinary history and directed retail investors to Investor.gov/CRS,” the order states.

Since June 30, 2020, G.research has also failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to achieve compliance with Form CRS requirements.

“Until July 2021, the firm’s WSPs contained no provisions relating to Form CRS,” the order states.

In July 2021, the firm updated its WSPs to provide guidance regarding Form CRS.

“The firm’s WSPs, even after this update, fail to identify any individual or individuals responsible for compliance with Form CRS requirements, and the updated WSPs do not prescribe procedures for supervising how the firm should review its Form CRS to determine whether updates are required or whether its Form CRS includes all required information,” the order states.