Regulation Best Interest and Form CRS Compliance Date: June 30, 2020
Since June 2019 when the Securities and Exchange Commission ("SEC") adopted Regulation Best Interest ("Reg BI") and Form CRS, the SEC and its staff have extensively engaged broker-dealers, investment advisers, retail investors, other market participants, the Financial Industry Regulatory Authority, Inc. ("FINRA") and other regulatory agencies in planning for the implementation of Reg BI and Form CRS. On June 15, 2020, SEC Chair Jay Clayton confirmed that the compliance date for Reg BI and the Form CRS remains June 30, 2020.1
To assist "Main Street" investors, SEC created a new website page2 containing educational resources on Form CRS and additional tools for researching broker-dealers, investment advisers and other financial professionals. The SEC also reminded broker-dealers and investment advisers to be careful in making these investment recommendations to Main Street investors:
- rollovers and withdrawals from 401(k) and other plans, especially those undertaken to take advantage of the tax benefits of the Coronavirus Aid and Economic Security (CARES) Act;
- investments in complex or risky products, in less liquid and more volatile markets, and in significantly leveraged products that rely on derivatives strategies to enhance returns;
- COVID-19 related investments such as investments in securities of publicly traded companies that claim to prevent, detect, mitigate or cure COVID-19 or that claim to be engaging in rapid manufacture of drug candidates that may be useful or necessary to slow down the spread of COVID-19; and
- investments in special purpose acquisition corporations and other structured investment vehicles that may pose conflicts of interest caused by their compensation structures or provide a false sense of security because of the "money-back" feature during these times of heightened market volatility.
Footnotes
1 See https://bit.ly/3ezSUNU.
Originally published 27 June, 2020
Originally published in REVERSEinquiries: Volume 3, Issue
6.
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