Regulation Best Interest Archives

Regulation BI and Real-World Enforcement

Posted on December 7, 2023 by SCM Communications

When the Financial Industry Regulatory Authority (“FINRA”) initially proposed the Regulation Best Interest (“Reg BI”), many professionals within the financial services industry shrugged and treated it as another item that could be added to the daily pile of tasks, documentation, and industry noise. Three years into the practical application and enforcement actions, broker dealers are experiencing the consequences of resistance to change. Fines, restitution, bans, and overall corrective actions can be significant, especially in respect to the originating event circumstances. Broker dealer responsibilities require establishment, maintenance, and enforcement of a supervisory system reasonably designed to achieve compliance with Reg BI’s Read more about Regulation BI and Real-World Enforcement[…]

FINRA Unscripted Podcast: Regulation Best Interest and Form CRS Two Years In

Posted on July 15, 2022 by admin

FINRA recently released a podcast Regulation Best Interest and Form CRS: Two Years In. This podcast provides a great update on the current Regulation Best Interest and Form CRS trends and best practices as well as common problem areas and effective practices to compliance. A few highlights from the podcast: Regulation Best Interest vs. Form CRS Reg BI applies to any retail firm or any firm with retail customers where recommendations are being made whereas Form CRS applies to any Firm that has retail investors including Firms that offer solely self-directed business. The podcast notes that there is no de Read more about FINRA Unscripted Podcast: Regulation Best Interest and Form CRS Two Years In[…]

FINRA’s New And Improved Fund Analyzer Tool

Posted on July 16, 2021July 16, 2021 by admin

FINRA has recently given us all a new and improved Fund Analyzer tool. With the recent emphasis on Share Class selection, Regulation Best Interest (Reg BI) for broker-dealers, and the fiduciary duty of Registered Investment Advisers. Firms are encouraged to train their staff on using this new tool.

The new analyzer allows individuals to sort through and compare more than 30,000 products and run a wide variety of investment scenarios. The tool’s enhancements enable users to better calculate how a fund’s fees, expenses, and discounts impact the value of a fund over time.

Regulators Focus on Reg BI During 2021 Audits

Posted on June 30, 2021June 30, 2021 by admin

The Securities and Exchange Commission adopted a new rule under the Securities Exchange Act of 1934 that established a standard of conduct for broker-dealers and the natural persons who are associated persons of a broker-dealer. It was established to enhance the broker-dealer’s standard of conduct to retail customers beyond the existing suitability obligation.

This standard of conduct takes critical principles from the underlying fiduciary obligations under the Investment Advisers Act of 1940. The SEC’s focus was regardless of whether a retail investor chooses a broker-dealer or an investment adviser, all retail investors should be entitled to a recommendation (by a broker-dealer) or advice (by an investment adviser) given in the best interest of the retail investor. It is essential to recognize that the term “retail investor” also includes Accredited Investors.

Regulation Best Interest: Examination Focus Areas

Posted on May 27, 2020May 27, 2020 by SCM Communications

Last month, the SEC’s Office of Compliance Inspections and Examinations (OCIE) issued a Risk Alert regarding examinations that will focus on broker-dealers’ compliance with Regulation Best Interest. The SEC wanted to make clear that the Regulation Best Interest compliance date of June 30, 2020 will not be extended. The OCIE will begin examinations with the program and will continue to add this element as part of exams for one year after the implementation date.

Form CRS: Initial Examination Guidance

Posted on May 21, 2020May 27, 2020 by SCM Communications

The June 30th compliance deadline for Regulation Best Interest and Form CRS is quickly approaching. It presents new compliance requirements for broker-dealers and investment advisers engaging in a retail business.