For the last several months, brokerage firms have been preparing for the implementation of the SEC’s Reg BI, which comes into effect next Tuesday (June 30th). The driving force behind the rule has been the SEC’s current chief, Jay Clayton. However, those paying attention will have seen that the whole Reg BI project was throw in doubt this week as President Trump has just nominated Clayton to be the US Attorney for the Southern District of New York. Clayton is apparently interested in the role. This raises serious questions about how seriously the rule will be enforced as the entire rule was basically Clayton’s project. According to Phyllis Borzi, who formerly headed the DOL, “It matters in the sense that this [Reg BI] was his baby, he was determined to push it through…”, its “effectiveness” she said “will rise and fall on how well it’s enforced because the rule itself leaves a lot of ambiguity, so it will be critical how it’s implemented”.
FINSUM: If Clayton leaves, it will create a major void for the rule, including, its enforcement, changes, and focus.