SEC to Vote on RBI on June 5: What it Means to ADISA Members

May 28, 2019

Regulation Best Interest and other items impacting the alternative direct investment industry are headed to a vote on June 5th, the U.S. Securities and Exchange Commission has announced via an open meeting agenda posted on its website.

In less than two weeks, the SEC will deliberate on four items, all of which will have an impact on ADISA membership:

  1. Regulation Best Interest – Standard of Conduct For Broker-Dealers. The four SEC commissioners will decide whether to adopt Regulation Best Interest, a new rule designed to raise the advice standard for brokers above the current suitability standard.
  2. Form CRS Relationship Summary. The SEC will decide if it will adopt rules requiring registered investment advisers and brokers to provide retail investors with a customer relationship summary, known as Form CRS.
  3. Standard of Conduct For Investment Advisers. The Commission will consider whether to publish an interpretation of the standard of conduct for investment advisers.
  4. Interpretation of “Solely Incidental.” The Commission will consider whether to publish an interpretation of “solely incidental” of section 202(a)(11)(C) of the Investment Advisers Act of 1940.

The SEC first proposed Regulation Best Interest and Form CRS, and provided a draft interpretation in April 2018. ADISA submitted comments on the proposed regulation during the comment period. These proposals, which rank as some of the most sweeping overhauls of the rules that govern brokers in years, will set new standards for managing and disclosing conflicts of interest.

ADISA expects the SEC to provide clarity to its membership after what has been nearly five years of discussion on Capitol Hill and in the agencies regarding obligations and standards of conduct for brokers. ADISA will closely monitor the June 5th SEC meeting and will communicate to membership once the final votes are announced.