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.