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Staying Ahead of Reg BI: The SEC Clarifies Standards of Conduct for Broker-Dealers and Investment Advisors  

By Blog

Public confusion about the different roles that Broker-Dealers and Investment Advisors play prompted the Securities and Exchange Commission (SEC) to issue an Interpretive Release outlining The Standard of Conduct for Investment Advisors

Released on June 5, 2019, its main objectives were to enhance customer (i.e. investor) decision-making and protection in large part by helping customers better understand the roles (and differences between) Broker-Dealers and Investment Advisors. In general, customers could be harmed if they are confused by how Broker-Dealers and Investment Advisors may have conflicting financial interests of their own. 

According to the Proposed Rule: Regulation Best Interest or Reg BI, a Broker-Dealer making a recommendation of a specific securities transaction or investment strategy must always act in the best interest of the customer (what satisfies “best interest” is outlined in the rule).

Meanwhile, Investment Advisors owe a fiduciary duty to their clients which – while similar to best interest — includes a duty of care and loyalty. This is reflective of the nature of the relationship between Investment Advisors and their clients which tends to require a higher level of trust over a longer period of time. 

Stay Ahead of Reg BI Compliance with Ascent

The key to staying current on Reg BI or any other SEC-issued rules is a compliance program that evolves with new regulations. 

Ascent provides you with a feed of regulatory changes (including those related to Reg BI) that apply to your firm, helps you visualize how the rule text has changed, and indicates whether that change impacts your existing controls, policies and procedures. 

Ascent also serves as a central repository for all regulator documents so you can easily search for speeches, guidelines or other releases concerning Reg BI, allowing for comprehensive research.

READ ARTICLE: How Ascent Simplifies Regulatory Change Management with Automation


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