As previously covered, the SEC adopted a rulemaking package designed to enhance retail investors' protections when dealing with broker-dealers and investment advisers, which would, among other things:
- require broker-dealers not to prioritize their interests ahead of customers' when making recommendations regarding a securities transaction, investment strategy or account recommendation (see Reg. BI); and
- provide guidance on Form CRS including key information about the firm, and include a standardized question-and-answer format to help investors compare the different types of firms.
The small-entity compliance guide, "Form CRS Relationship Summary; Amendments to Form ADV," includes explanation and guidance regarding, among other things:
- who is subject to filing and delivering a relationship summary;
- which topics must be included in a relationship summary;
- specific formatting for firms to follow;
- how and when the relationship summary must be delivered to a retail investor and ongoing delivery investigations;
- requirements related to updating the relationship summary;
- how to file the relationship summary with the SEC; and
- recordkeeping requirements.
The small-entity compliance guide, "Regulation Best Interest," includes explanation and guidance regarding, among other things:
- what a recommendation is and which recommendations are covered;
- who is a retail customer;
- what the disclosure, care, conflict of interest and compliance obligations require; and
- record-making and recordkeeping requirements.
Commentary Steven Lofchie
The compliance guides are useful short summaries of both sets of requirements, but probably don't do much for firms trying to figure out how to comply with the transactional demands of Regulation Best Interest.
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