On June 5, 2019, the SEC announced new rules and interpretations clarifying required standards of conduct for broker-dealers and investment advisers when advising retail customers. Firms must be ready to comply with Regulation Best Interest and Form CRS by June 30, 2020.
The package released included disclosure requirements and further guidance regarding the adviser/client relationship, including:
- Regulation Best Interest, which establishes a code of conduct beyond existing obligations for broker-dealers when making recommendations to retail customers. Broker-dealers must not place their financial or other interests ahead of the interest of their retail customers without proper disclosure.
- Form CRS, a relationship summary that broker-dealers and registered investment advisers will be required to provide to retail clients at the beginning of their relationship.
- An interpretation of the standard of conduct for investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”).
- An interpretation of the solely incidental prong of the broker-dealer exclusion under Section 202(a)(11)(C) of the Advisers Act.
For more about the implications and next steps for Broker Dealers and Investment Advisors, watch the on-demand webinar Understanding Regulation Best Interest and Form CRS featuring insight from Carl Seiler, JD, Managing Director of Blue River Partners.
And if you're looking for compliance solutions to help your organization manage conflicts of interest, learn more about how MyComplianceOffice can help.