On September 9, the Securities and Exchange Commission (SEC) released two small entity compliance guides to assist broker-dealers and investment advisers in complying with the recently adopted Regulation Best Interest (Reg BI) and Form CRS.
On June 5, the SEC adopted (1) Reg BI and (2) Form CRS and related rules under both the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934 (Exchange Act). Reg BI establishes a new standard of conduct under the Exchange Act for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer. Form CRS and its related rules require registered investment advisers and registered broker-dealers to deliver to retail investors a brief customer or client relationship summary that provides information about the firm, including costs, conflicts of interest and disciplinary history. Firms must file their relationship summaries with the SEC.
The guides summarize and explain Reg BI and Form CRS and also inform small entities of the SEC’s Division of Investment Management and Division of Trading and Markets availability to assist with questions regarding Reg BI, Form CRS or relating to the package of rules and interpretations adopted in connection therewith.
A copy of the guide for Reg BI is available here.
A copy of the guide for Form CRS is available here.