Wednesday, 17 June 2020 10:28

Reg BI to Govern 401(k) and IRAs warns SEC

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The SEC issued a pretty stern warning (or reminder, depending on how you look at it) to brokers this week. SEC chairman Jay Clayton issued a very direct statement addressing broker-dealers and saying that they needed to take “special care” when making 401(k)/IRA rollovers because form CRS, as part of Reg BI, would cover such transactions. Clayton also emphasized that 401(k)/IRA rollovers are considered a primary feature of the rule, saying that it was one of the “most significant enhancements over the status quo … should be approached with care”. He concluded “Firms should recognize that these recommendations are subject to Reg BI and ensure that their policies and procedures meet the requirements of Reg BI, the Advisers Act and Form CRS, as appropriate”.

FINSUM: Just in case anyone wasn’t clear, the SEC just made it abundantly obvious that there is no wiggle room here. The most interesting thing to us in this statement is how he seemed to indicate this will be the key focus of the SEC (which will likely be reflected in enforcement).

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