← Broker database 2023-05-19
American Wealth Management Fined for Inaccurate Form CRS Disclosures
According to FINRA, American Wealth Management, Inc. was censured, fined $35,000, and required to review and remediate its Form CRS to ensure compliance with disclosure requirements.
The firm willfully violated Section 17(a)(1) of the Securities Exchange Act and Exchange Act Rule 17a-14 by omitting required information from its Customer Relationship Summary (Form CRS). The firm failed to respond "Yes" to the question concerning legal or disciplinary history, even though the firm and six registered representatives had prior legal or disciplinary history. Before filing its Form CRS, the firm had already disclosed five disciplinary actions on its Form BD, and all such filings were reflected in FINRA's Central Registration Depository and BrokerCheck.
The firm also omitted other required information from Form CRS, including specific headings and disclosures about potential conflicts of interest. It failed to include the required conversation starter, "How might your conflicts of interest affect me, and how will you address them?" The firm later updated its Form CRS to include required language about conflicts of interest and the conversation starter.
Additionally, the firm failed to adequately explain how its representatives are compensated, instead only describing certain types of compensation representatives do not receive. Following FINRA's investigation, the firm updated its Form CRS to respond "Yes" to the legal or disciplinary history question.
This case demonstrates the importance of accurate and complete disclosure on Form CRS. This document is designed to provide retail investors with key information about the firm's services, fees, conflicts of interest, legal history, and other important matters in a standardized, easy-to-understand format. Investors should carefully review Form CRS and use FINRA BrokerCheck to verify a firm's disciplinary history before establishing a business relationship.