FINRA urged broker-dealers to prepare for the implementation of SEC Regulation Best Interest ("Reg. BI").
As previously covered, Reg. BI requires broker-dealers to act in the best interest of customers when making recommendations regarding a securities transaction, investment strategy or account recommendation. In addition, the regulation provides interpretations of advisers' standard of conduct under the Investment Advisers Act of 1940 (Advisers Act), and the "solely incidental "prong of the broker-dealer exclusion from the Advisers Act. The regulation also requires the development and delivery of a relationship summary ("Form CRS"). Reg. BI and Form CRS will go into effect on June 30, 2020.
In the regulatory notice, FINRA encouraged firms to "actively engage with SEC staff as early as possible" on questions that arise in the implementation process. FINRA also created a web page where it will post Reg. BI-related information to assist firms in their implementation efforts.
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