Opinion: SEC’s New Rule, Despite Its Name, Isn’t In Your ‘Best Interest’
July 27, 2020 by Carla Fried
Just as more households are seeking help managing their finances amid the hardships of the coronavirus recession, the federal government has implemented a new regulation that falls short of protecting consumers.
Beginning June 30 the Securities and Exchange Commission began enforcing its new Regulation Best Interest, commonly known as Reg BI.
Best Interest sounds good. And to be fair, it’s actually a step up from the prior low level of accountability brokers had to meet, called the suitability standard.
But Reg BI is still pretty darn weak, and a major step back from a level of consumer protection that had been previously proposed during the Obama administration.
A key element of Reg BI is that it merely requires brokers to disclose conflicts of interest. By mandating disclosure rather than disallowing those conflicts, the SEC has kept the onus on consumers to figure out if they are going to be taken advantage of. How’s that in your best interest?
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