SEC Regulation Best Interest (Reg BI) compliance is an expansive regulatory challenge that impacts the fundamental business structure of financial services organizations as it creates new regulatory and compliance risks. The development of core Reg BI compliance and supervisory components will help firms address the burden of compliance departments in the broker-dealer industry.
SEC Regulation Best Interest, approved by the SEC on June 5, 2019, includes proposals setting new conduct standards for broker-dealers. To ensure Reg BI compliance, broker-dealers must adhere to a package of rules and interpretive guidance directing them to act in the “best interest” of their clients. The package also includes new compliance requirements and guidance for both broker-dealers and investment advisers concerning the new obligations owed to retail investors.
Reg BI Compliance Deadline Information
The adoption of SEC Regulation Best Interest marks the start of a very short implementation phase for firms to ensure Reg BI compliance. The SEC stated that the interpretative guidance will be effective upon publication in the Federal Register. (The rules and forms will be effective 60 days later.) Broker-dealers must begin complying with the new rule, prepare, deliver to investors, and file the customer relationship summary by June 30, 2020.
How Bates Compliance Can Help:
Our Reg BI compliance consultants can help your firm through the implementation phase of SEC Regulation Best Interest. We help you navigate:
Duty of care obligations
Conflicts of interest obligations
Additional compliance obligations
We can also assist you with:
Developing the new Reg BI Client Relationship Summary (“Form CRS”) for retail investors
Navigating additional compliance requirements for BDs and IAs
Understanding new SEC guidance concerning the “Solely Incidental” registration exemption of the Investment Advisers Act
Impact and readiness assessments
Conflicts of interest inventory
Conflicts of interest assessment
Product shelf reviews
New product approval processes
Drafting new policies and procedures
Data capture and recordkeeping
Training for compliance and sales professionals
REG BI COUNTDOWN – HERE’S WHAT YOU SHOULD BE WORKING ON NOW:
Jill Ehret was a panelist at the 2nd Annual FI Summit, August 14, 2019 in Los Angeles. The panel discussed Reg BI and its anticipated impact upon broker-dealers, registered representatives, registered investment advisers, and investment adviser representatives. Bates was a co-sponsor of this year's summit.
Discover the Difference
Our Bates Compliance team can guide you to compliance with SEC Regulation Best Interest (Reg BI).