The Securities and Exchange Commission (SEC) announced that it has scheduled an open meeting on June 5 to consider pending rulemaking related to the relationship of broker-dealers and investment advisers with their customers stemming from proposed Regulation Best Interest, and addressing the standard of care that investors should receive from broker-dealers and investment advisers.
The matters that the SEC intends to consider include:
- Whether to adopt new rule Regulation Best Interest, which would establish a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities.
- Whether to adopt Form CRS Relationship Summary, which would require registered investment advisers and registered broker-dealers to provide a brief relationship summary to retail investors.
Additionally, the SEC intends to consider whether to publish an interpretation of the standard of conduct for investment advisers and an interpretation of the “solely incidental” prong of Section 202(a)(11)(C) of the Investment Advisers Act of 1940.
The proposed meeting is a clear signal from the SEC that the long awaited, and much discussed alternative to the failed Department of Labor’s fiduciary rule, is ready to be released to the financial industry. To this end, it is anticipated that the impact of Regulation Best Interest will be felt relatively soon by the industry after the roll out of the proposed rules and interpretations.