On April 7 the SEC published two Risk Alerts providing broker-dealers and investment advisors with information on the expected scope of initial Regulation Best Interest enforcement. The guidance indicated that initial exams will focus on evidence that firms have made “good faith” efforts to comply.
In the statement, Peter Driscoll, Director of the Office of Compliance Inspections and Examinations, noted “Based on conversations we have had with the industry, we know firms have made substantial progress in implementing these new rules. We understand that this implementation will be an iterative process, and our focus will be on firms continuing good faith and reasonable efforts, including taking into account firm-specific effects from disruptions caused by COVID-19.”
Initial Reg BI exams will focus on assessing the operational effectiveness of broker-dealers’ policies and procedures, along with good faith efforts to comply.
Preliminary Form CRS enforcement will review the filing and posting of a firm’s relationship summary and their process for delivering the form to retail investors, along with good faith efforts to comply.
In an additional statement, FINRA has indicated that they will take the same approach as outlined by the SEC, looking for good faith efforts—but taking action when there is evidence of customer harm or conduct violating current standards.
Wondering how Reg BI will impact your firm? We have resources that can help.
Join us for a webinar on April 15 with Paul Murdock and Gus Macedo from MCG Consulting featuring practical guidance on what broker dealers and investment advisors need to know right now to be ready for the June 30 deadline, including insight on the latest SEC statements.
To learn about the basics of Reg BI and Form CRS watch our on-demand webinar featuring 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. If you're ready to talk with us, let us know and one of our experts will be in touch.