The SEC issued requests for comment on two proposals: the "retail best interest" standard for broker-dealers and a fiduciary interpretation for investment advisers. Comments on the proposed rules and interpretations must be received by August 7, 2018.
The SEC proposals would (i) require broker-dealers to act in the "best interests" of retail customers when making a recommendation of any securities transaction or investment strategy, (ii) affirm and clarify the various types of obligations that investment advisers owe to their clients and (iii) require broker-dealers and investment advisers to provide retail investors with a short-form "relationship summary."
With respect to Regulation Best Interest and the proposed relationship summary, the SEC is seeking input on, among other things:
- proposed standards of conduct;
- the impact on the range of services available to retail customers;
- required policies and procedures;
- proposed disclosure requirements;
- additional steps to provide retail investors with critical information;
- the proposed implementation of the requirements;
- restriction on the use of certain titles; and
- the estimated burden and costs of compliance.
The proposed investment adviser fiduciary interpretation also includes a request for comment as to whether:
- federal licensing and continuing education requirements for the personnel of SEC-registered investment advisers should be implemented;
- rules should be proposed to require registered investment advisers to provide account statements, regardless of whether the adviser has custody of client assets; and
- SEC-registered investment advisers should adhere to financial responsibility requirements like those applicable to broker-dealers, such as capital requirements or the requirement to obtain a fidelity bond.
Comments concerning the suggested rule amendments and proposals must be received by August 7, 2018.
(For additional coverage, see SEC Proposes "Retail Best Interest" Standard for Broker-Dealers; Fiduciary Interpretation for Advisers and Cadwalader Attorneys Analyze SEC's "Retail Best Interest" and Fiduciary Guidance Proposals.)
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