Chapleau Law Group

Trusted Counsel to the 529 and ABLE Program Communities

SEC Adopts Regulatory Initiatives Impacting Broker-Dealers and Investment Advisers

The SEC voted to approve three important regulatory initiatives today:

  1. Regulation Best Interest,
  2. A Commission Interpretation Regarding Standard of Conduct for Investment Advisers, and
  3. A Commission Interpretation Regarding the Solely Incidental Prong of the Broker-Dealer Exclusion from the Definition of Investment Adviser

Regulation Best Interest According to the SEC, “[u]nder Regulation Best Interest, broker-dealers will be required to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. Regulation Best Interest will enhance the broker-dealer standard of conduct beyond existing suitability obligations and make it clear that a broker-dealer may not put its financial interests ahead of the interests of a retail customer when making recommendations.”

Commission Interpretation Regarding Standard of Conduct for Investment Advisers The SEC issued this interpretation “to reaffirm and, in some cases, clarify the Commission’s views of the fiduciary duty that investment advisers owe to their clients under the Advisers Act.”

Commission Interpretation Regarding the Solely Incidental Prong of the Broker-Dealer Exclusion from the Definition of Investment Adviser According to the SEC, this interpretation “clarifies the Commission’s position, and illustrates the application in practice in connection with exercising investment discretion over customer accounts and account monitoring.”

We are analyzing these regulatory initiatives and are prepared to advise clients on how each initiative may potentially affect the operations of broker-dealers or investment advisers.

updated: 1 month ago