SEC new rule: 'Regulation Best Interest'

At its just-completed Open Meeting, the SEC Commissioners voted 4-1 to move ahead with proposing the following:
 
A new rule—to be called “Regulation Best Interest" — that would raise the standard of conduct for broker-dealers and their registered representatives when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer to require the broker-dealer/registered representative to act in the best interest of the investor without putting the interest of the broker-dealer/registered representative ahead of the investor’s interest.

A new rule to require registered investment advisers and broker-dealers to provide a brief relationship summary to retail investors. This rule would require that a new Form CRS — for “Customer Client Relationship Summary”— be provided to investors. Form CRS would disclose, among other things, key facts about the nature of the relationship between the customer and the broker-dealer or investment advisor, fee structures and the particular business model of the firm.

A part of the new proposed rules would implement “labeling” requirements that would regulate the use of certain titles. This would prohibit broker-dealers and their representatives from using the terms “advisor” and “adviser” unless it/they are an investment advisor registered under the 1940 Investment Advisors Act (the “40 Act”), and subject to the fiduciary duty generally required for such investment advisors.

A Commission interpretation of the existing standard of conduct for investment advisers registered under the 1940 Investment Advisors Act. The purpose of this interpretation would be to clarify for investors and investment advisors alike the SEC’s views on what the 1940 Act standard of conduct for investment advisors actually means and what behaviors and actions it requires of investment advisors.
 
NAIFA will take some time to review the nearly 1,000-page proposal and submit detailed comments.

The SEC has set a 90-day time deadline for the submission of comments, which will take this process until at least mid-July.
 
NAIFA has met with the Chairman and other commissioners, and looks forward to continuing a productive dialogue throughout the rulemaking process. 
  • Posted April 18, 2018 IN


Comments
Blog post currently doesn't have any comments.