SIFMA strongly supports the SEC’s heightened and more stringent broker-dealer best interest standard.

Since early 2009, SIFMA has consistently advocated for the U.S. Securities and Exchange Commission (SEC) to establish a uniform best interest standard for financial professionals when providing investment advice.

In June 2019, the SEC voted 3-1 to finalize Regulation Best Interest. Reg BI requires broker-dealers to act in the best interest of their retail customers when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. The SEC also finalized a related Form CRS Relationship Summary and provide important, plain English, up-front disclosures to retail customers.

Following the June 30, 2020 compliance date, all broker-dealers and their financial professionals must now comply with Reg BI’s requirements.

“As written, the SEC’s Regulation Best Interest rule will impose a materially heightened standard of conduct for broker-dealers when serving retail clients. While principles-based, the rule is specific with respect to the duty and obligations brokers owe to their clients, and what steps they must take to comply, including the obligation to eliminate, or disclose and mitigate, certain conflicts of interest. It is undeniable that this rule will directly enhance investor protection and contribute to increased professionalism among financial service providers,” stated SIFMA President and CEO Kenneth E. Bentsen, Jr.  “Compliance with the rule will not be easy for the industry. Firms will need to make substantial changes. The costs to implement will no doubt be significant, but, we believe, worthwhile to uniformly enhance investor protection to the level investors should and do expect, while preserving investor choice and access to investment advice.”

SIFMA continues to support the development and improvement of the Reg BI regime through SEC examinations and guidance, and we continue to facilitate and encourage our member firms’ compliance efforts.

From the Archives: The DOL Fiduciary Rule

Together with the U.S. Chamber of Commerce, Financial Services Institute, Financial Services Roundtable, Greater Irving-Las Colinas Chamber of Commerce, Insured Retirement Institute, Lake Houston Area Chamber of Commerce, Lubbock Chamber of Commerce and Texas Association of Business, SIFMA filed a legal challenge to the Department of Labor’s fiduciary standard of conduct rule for brokers and registered investment advisors serving people with Individual Retirement Accounts (IRAs) and 401(k) plans. On March 15, 2018, the U.S. Court of Appeals for the Fifth Circuit, in a 2-1 decision, ruled to strike down the Department of Labor’s fiduciary rule in its entirety, thereby preserving access to affordable financial advice.