SEC to unveil final broker-dealer standard of conduct package on June 5

The SEC just announced that it will consider adoption of Regulation Best Interest and the other parts of the standards of conduct rulemaking package at an open meeting scheduled for 10 am on June 5.

We are expecting:

A standard of conduct for broker-dealers and their associated natural persons when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities.
The SEC to consider whether to require registered investment advisers and registered broker-dealers to provide a brief Form CRS relationship summary to retail investors, as well as whether to publish an interpretation of the standard of conduct for investment advisers.
The SEC will consider whether to publish a Commission interpretation of the “solely incidental” prong of section 202(a)(11)(C) of the Investment Advisers Act of 1940, which provides that the term “investment adviser” does not include any broker or dealer whose performance of investment advisory services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor.

The DOL, meanwhile, which by all accounts is coordinating with the SEC, still plans to release its own guidance that will likely pair with Reg BI. We expect the DOL guidance Q3 or Q4 this year.

Blog Authors

Sara P. Crovitz

Sara Crovitz, most recently Deputy Chief Counsel and Associate Director of the U.S. Securities and Exchange Commission’s Division of Investment Management, provides counsel on all aspects of investment company and investment adviser regulation. She worked at the SEC for 21 years, including 17 years in the Division of Investment Management focusing on issues under the Investment Company and Investment Advisers Acts of 1940. While in the Division, Sara supervised the provision of significant legal guidance to the investment management industry through no-action and interpretive letters, exemptive applications, IM guidance updates and other written and oral means.

William T. Mandia

William Mandia represents financial institutions and insurers in complex commercial and class action litigation. He regularly defends and advises life insurers, intermediaries, banks, broker-dealers, investment advisers, and other financial services providers in connection with sales practices claims arising from a wide range of financial and life insurance products, including, but not limited to, claims for alleged breach of fiduciary duty, fraud, and violations of state consumer protection laws.

Peter M. Hong

Peter Hong uses his many years of service at the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to guide clients through the various regulatory requirements involved in the offer of financial services and products. His practice includes the registration and regulation of investment advisers, broker-dealers, commodity trading advisers, commodity pool operators, and introducing brokers under federal and state laws, as well as the formation and ongoing compliance obligations of registered and private investment companies.