August 27, 2019 Articles

New Regulation Best Interest Changes the Standard of Care for Brokers. But by How Much?

“Reg BI” enhances the standard of broker-dealer conduct beyond prior suitability requirements.

By Daniel Nathan, Trace Schmeltz, Daniel Streim, and Nicholas Peterson

On June 5, 2019, the Securities and Exchange Commission (SEC) adopted a highly anticipated package of rulemakings and interpretations popularly known as “Regulation Best Interest” or “Reg BI.” The SEC said that this package would “enhance the standard of conduct that broker-dealers owe to their customers and align the standard of conduct with retail customers’ reasonable expectations” and “will also provide additional transparency and clarity for retail investors through enhanced disclosures designed to help them understand who they are dealing with, and why that matters.”

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