We recently announced a Regulation BI webinar that was held in late May. Below is the summary of that webinar from Justin Schleifer of Aspect Advisors. Please reach out to us or Aspect Advisors if you’d like more information on Reg BI or the webinar.
Thank you – Reg BI webinar overview
Thank you for attending our Regulation Best Interest (Reg BI) webinar last week. I would also like to extend many thanks to my fellow panelists, James Dombach and Paul Merolla from the law firm Murphy & McGonigle, and to Bart Mallon of Cole-Frieman & Mallon for hosting. The webinar provided an overview of Reg BI obligations, defined key terms, reviewed the SEC’s OCIE guidance regarding regulatory expectations, and provided practical suggestions for implementation by broker-dealers (BDs) and registered investment advisers (RIAs) for the June 30 deadline for compliance.
Here are the key take-aways about Reg BI:
- When making a recommendation of any securities transaction or investment strategy to a retail customer (as defined), BDs must act in the best interest of the retail customer at the time the recommendation is made.
- 4 components of obligation:
- Disclosure: effective Form CRS content and delivery for BDs and RIAs;
- Care: sufficiently understanding the product and the customer;
- Conflicts of Interest: review, mitigation/elimination, and disclosure; and
- Compliance: effective controls and best practices.
- SEC Office of Compliance Inspections and Examinations (“OCIE”) expectations include:
- Assessment: Has the Firm sufficiently analyzed and documented its business practices, its registered representatives, and its products to make necessary disclosures?
- Implementation: BDs and RIAs are required to provide a brief relationship summary (Form CRS) including appropriate disclosures to both new and existing retail investors.
- Documentation: Firms must have policies and procedures that assess potential risks, rewards, and costs of recommendations in light of a retail customer’s investment profile; how the 4 components of obligation will be met; and the process for Form CRS delivery.
If you (or your colleagues) would like to review any of the webinar content, please email Amanda Brown for a link to the recording. If you have any questions about Reg BI or need advice about how to implement at your firm, please reach out to any of our panelists.
We hope you enjoyed this event and if you have any feedback, we would love to hear from you. We look forward to seeing you at our next event!
President of Aspect Advisors
Aspect Advisors is a regulatory compliance consulting firm that provides customized compliance solutions for complex challenges. Our clients are financial service innovators, including fintech companies, registered investment advisers (RIAs), broker-dealers and private fund managers. Our back-office services include regulatory registrations and filings, compliance policies and procedures, conducting annual reviews, outsourced Chief Compliance Officer/FinOP support, and other bespoke items.
Murphy & McGonigle
Murphy & McGonigle is a law firm that serves the litigation, enforcement defense, and regulatory needs of clients across the full spectrum of the financial services industry – from national banks, broker-dealers, investment advisers, and hedge funds, to national and international securities markets and exchanges.
Bart Mallon is a founding partner of Cole-Frieman & Mallon LLP. Cole-Frieman & Mallon is a boutique law firm focused on providing institutional quality legal services to the investment management industry. For more information on this topic, please contact Mr. Mallon directly at 415-868-5345.