SEC Votes to Adopt Regulation Best Interest

Jun 05, 2019

On Wednesday, June 5, the U.S. Securities and Exchange Commission voted to adopt Regulation Best Interest, which will require that broker-dealers and registered representatives act in the best interest of their clients. This is a significant achievement in augmenting the current suitability standard, which requires that brokers determine that an investment is suitable for their client. The new regulation should help strengthen advice standards, increase transparency and improve investor protections while maintaining affordable access to professional investment advice for all investors.

ADISA applauds the SEC’s reasonable and responsible effort to foster greater investor protection while allowing for robust competition among broker-dealers and investment advisors. We believe Reg. BI will encourage greater investor choice and access to a variety of investment advice that will empower all investors to pursue their retirement and savings goals. The SEC has not yet released the full regulatory language, and there will be a lengthy process during which the industry will enact measures to ensure compliance with Reg. BI. ADISA will continue to monitor and report on implementation as well as provide appropriate support to the financial industry and our members through our core principles – education, networking and advocacy.

The rules will become effective 60 days after their publication in the Federal Register. The compliance deadline for Reg BI for broker-dealers is June 30, 2020.

“There is much work behind the scene at ADISA to help influence the final provisions of this rule as it is rolled out,” said ADISA’s executive director, John Harrison, “and we will work hard to get the needed information out to our members as they implement this standard.  We thank our L & R leadership team of Greg Mausz, Larry Sullivan, John Grady, Catherine Bowman, and Tom Rosenfield for their diligent work on behalf of ADISA and the industry.”