SEC passes Regulation Best Interest, but fiduciary rules could make a comeback
June 10, 2019 by Andrew Welsch
Advisors and brokers will soon be faced with new SEC disclosure and compliance requirements, but the changes disappoint consumer advocates — and suggest more state regulatory action on fiduciary rules is likely.
The commissioners voted 3-1 on four items: Regulation Best Interest, Form CRS (a relationship summary form for clients), an interpretation of standards of conduct for RIAs, and an interpretation of the “solely incidental” clause for broker-dealers. The regulations take effect June 30, 2020.
From the moment it was introduced for public feedback, Reg BI was a controversial measure that received a warm reception by Wall Street firms and sharp criticism from consumer advocates for falling well short of what they deem to be necessary investor protections.
SEC Chairman Jay Clayton rebutted criticism during the hearing, saying Regulation Best Interest draws on “key fiduciary principles and cannot be satisfied through disclosure alone” — phrasing that was repeated by other SEC officials, though the commission’s meeting included lengthy discussion of new disclosure requirements.