Displaying items by tag: reg bi

According to Richard Best, Head of the Division of Exams at the Securities and Exchange Commission, Regulation Best Interest and the Advisers Act fiduciary duty remains a top priority for 2023 exams. While speaking at the SEC’s National Compliance Seminar, Best said that standards of conduct such as Reg BI and the fiduciary duty “remain top of mind for us.” Best told compliance officers that the Division of Exams is “focused on how broker-dealers and advisors satisfy their obligations under Reg BI and the Advisers Act fiduciary standard to act in the best interest of retail investors and not to place their own interests ahead of retail investors interest.” The exam division publishes an annual priorities letter each year, with the 2023 priorities expected to be issued early next year. The three areas of focus will be ESG-focused investing, private funds, and standards of conduct. For ESG, the SEC will look into whether advisors are accurately disclosing their ESG investing approaches and have implemented policies to prevent violations of federal securities laws.

Finsum:With exam priorities expected to be issued early next year, the SEC has made Regulation Best Interest and the Advisers Act fiduciary duty a top priority for 2023 exams.

If firms haven’t addressed and mitigated any potential conflicts of interest yet, they better start soon. Both FINRA and the SEC have not only brought their first Regulation Best Interest enforcements this year, but both agencies are promising that they will be ramping up enforcement. Robert Cook, President and CEO of FINRA, warned at the recent ALI-CLE Life Insurance Products Conference in Washington, D.C. that “Anything that would be a violation of the old suitability standard is now going to be a violation under the Reg BI standard.” He also warned firms that there are more Reg BI enforcement cases in the pipeline and said FINRA exams will “continue to evolve in terms of expectations and the depth of what we’re looking for.” Reg BI, which requires that registered reps demonstrate they have put customers’ best interests before their own is an upgrade from the old suitability standard, which only required reps to make sure products and services are appropriate for clients. The SEC has also promised more Reg BI enforcements and is bringing similar cases against investment advisor reps under the fiduciary standard. SEC Chairman Gary Gensler recently stated, “The ‘interplay’ between Reg BI and the fiduciary standard is important and that the agency will publish a staff bulletin on the topic.”

Finsum:After bringing their first Regulation Best Interest enforcements this year, both FINRA and the SEC are ramping up Reg BI enforcement. 

Skience, a leading financial services solution and consulting provider, recently announced an integration with CapitalROCK’s RightBRIDGE Best Interest Validation System. Skience offers consulting services and an award-winning platform that provides wealth management firms and RIAs with an efficient way to unify their technology. CapitalROCK, the makers of RightBRIDGE, provides financial services firms with a powerful and configurable rules engine to determine and document the best interest status of proposed rollovers, account types, and products. RightBRIDGE uses a scoring engine and ReasonText™ that explains why a recommendation fits a client’s needs and the licensing firm’s best interest requirements. By adding this integration, Skience will be able to provide advisors with an easy way to integrate Regulation Best Interest into their workflow process with a click of a button. The data can be used to update Skience records and be leveraged by Skience’s suitability checks as Skience’s client and household data will be prefilled into RightBRIDGE. The announcement comes as Robert Cook, FINRA Chief recently noted that more Reg BI-related enforcement cases are in the pipeline.

Finsum:Financial services platform Skience announced that it will be integrating with CapitalROCK’s RightBRIDGE solution that helps advisors meet Reg BI standards.

See the badge, mister? Shiny, huh? Smudges? Please.

Yep; the sheriff’s in town. At the recent 2022 PLANADVISER National Conference, the ongoing enforcement of the Regulation Best Interest package was a hot topic among SEC speakers, according to -planadvisder.com. The package now is fully enforced. But the subject had plenty of company; other SEC regulatory efforts -- including proposed regulations concerning money market funds, ESG investments and cybersecurity – also were addressed.

The SEC’s updated interpretation of the fiduciary duty as prescribed by the Investment Advisers Act was in total effect as well.

Now, when the law speaks, of course, listening up’s highly recommended. Here, for instance: upon passing a recommendation to a retail customer, brokerage professionals are required to act in a retail customer’s best interest. Putting their own financial or other interest ahead of the retail customer’s interests? Yep: a no no for those professionals.

For more than the past year, Reg. Bi and Form CRS compliance have been in the crosshairs of FINRA and the SEC. That included the maiden SEC Reg. Bi settlement, which occurred in June, according to goodwinlaw.com.

The resounding takeaway from a recent FINRA conference call is that the regulatory body is taking a “no one-size-fits-all” approach to Reg BI compliance. FINRA explained that it is moving away from good faith efforts reviews and into “deeper dives” on how firms comply with Form CRS and the Reg. BI Care, Compliance, Disclosure, and Conflicts of Interest obligations. The conference call focused on FINRA’s expectations during exams and the types of violations that its exam teams will refer to their enforcement colleagues. FINRA mentioned several common violations that it will refer to its Department of Enforcement, including the failure to recognize the applicability of Reg BI and Form CRS deficiencies related to incorrectly answering the disciplinary history question. It also indicated that firms that were previously cited for Reg BI CRS deficiencies, and made no efforts to correct findings, are more likely to be referred to Enforcement. The overall message for firms is that they should document the steps they have taken to further Reg. BI and Form CRS compliance. This could be the difference between an exam deficiency or an enforcement action.

Finsum: In a recent conference call, FINRA’s explained that there is no one size fits all approach to Reg BI compliance and firms shoulddocument the steps they have taken to make sure they’re compliant.