The SEC just made its first big move to tighten regulations ahead of Biden’s inauguration. While the SEC did clarify digital marketing rules a couple of weeks ago, that shift was largely welcomed as the previous guidelines were vague and very outdated. The big change this week is that the SEC is beefing up its Reg BI compliance program. Specifically, it is scaling up its testing program to make sure firms are complying with Reg BI. According to a note from the SEC, “Division staff has assessed the results of its initial Regulation Best Interest examinations and now that approximately six months have passed since the Regulation Best Interest compliance date, the Division intends to begin its next phase by conducting more focused examinations … beginning in January 2021”.
FINSUM: Enforcement of Reg BI has been pretty lax to date, but this feels like a new phase is beginning. Most insiders in the business think the Biden administration’s approach will be to intensify Reg BI enforcement rather than write a new rule, so this step makes logical sense within that.