The new SEC standards of conduct for broker-dealers and Registered Investment Advisors are here, and by June 30, 2020, registered broker-dealers must begin complying with Regulation Best Interest. According to the SEC, this package of rules and interpretations is designed to enhance protections and preserve choice for retail investors in their relationships with investment advisors and broker-dealers. Regulation Best Interest is intended to enhance the broker-dealer standard of conduct, requiring such firms to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer.1
We are excited to partner with Eversheds Sutherland to help you prepare for the compliance impact of this change. As a global top 15 law firm, Eversheds Sutherland provides the legal advice and strategic counseling that clients need from their advisors for the best outcomes.
To provide ongoing support as you adjust to the new standards, we are releasing a series of webinars and reports. The latest report focuses on potential enforcement and litigation risks that the new package may create as broker-dealers become subject to a new standard of conduct. It provides an overview of how the SEC enforces the federal securities laws and rules and the potential risks, covering:
- An overview of enforcement;
- Enforcement-related implications of Regulation Best Interest and the Form CRS Relationship Summary;
- The SEC’s Interpretation Regarding Standard of Conduct for Investment Advisors and Interpretation of the Solely Incidental Prong, both of which went into effect as of July 12, 2019; and
- Litigation implications of Regulation Best Interest.
The report is available for download here.
All of the webinars and reports released to-date are available here, and we’ll continue to update the page in the coming months.
Sources:
1. “SEC Adopts Rules and Interpretations to Enhance Protections and Preserve Choice for Retail Investors in Their Relationships With Financial Professionals,” SEC.gov, last modified on June 5, 2019, https://www.sec.gov/news/press-release/2019-89.
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