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Rules & Regulations

SEC to Vote on Regulation Best Interest

May 28, 2019

by Howard Haykin


On June 5th, the Securities and Exchange Commission will vote on whether to adopt Regulation Best Interest under Securities Exchange Act of 1934.


If adopted, the new rule would establish a ‘standard of conduct for broker-dealers’ and their associated persons when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer. The proposed standard of conduct is to act in the best interest of the retail customer at the time a recommendation is made without placing the financial or other interest of the broker-dealer or an associated person making the recommendation ahead of the interest of the retail customer.



OTHER AGENDA ITEMS.    During the open meeting, the SEC will also consider these other matters:


  • Whether to adopt new and amended rules and forms to require registered investment advisers (RIAs) and registered broker-dealers (B/Ds) to provide a brief relationship summary to retail investors.  [Form CRS Relationship Summary]



  • Whether to publish a Commission interpretation of the solely incidental prong of section 202(a)(11)(C) of the Investment Advisers Act of 1940. Under this section, “the term ‘investment adviser’ does not include any broker or dealer whose performance of investment advisory services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation therefor.”  [Interpretation of "Solely Incidental"]