While the comment period for Regulation Best Interest (Reg BI) was extended, the compliance date for the landmark rules will not change, SEC Chairman Jay Clayton said in a statement on Thursday.
“[As] the effects of COVID-19 became more apparent, the public was notified that, although comment periods on a variety of proposed actions had closed (or would close) in March 2020, the Commission would not take final action on those items in the coming weeks to allow potential commenters more time to submit comments for consideration if needed,” Clayton wrote on the commission’s website. “We do not expect to move forward on any of those proposed actions before May 1, 2020.”
Noting that the SEC’s staff have engaged with broker-dealers, RIAs, retail investors, FINRA and others, “we believe that the June 30, 2020 compliance date for Reg BI and other requirements, including the requirement to file and begin delivering Form CRS, remains appropriate.”
Good faith efforts
“Firms should continue to make good faith efforts around operational matters to ensure compliance by June 30, 2020, including devoting resources as necessary and available in light of the circumstances,” Clayton added. “To the extent that a firm is unable to make certain filings or meet other requirements because of disruptions caused by COVID-19, including as a result of efforts to comply with national, state or local health and safety directives and guidance, the firm should engage with us.”
Commission and the staff will take the “firm-specific effects of such unforeseen circumstances (and related operational constraints and resource needs)” into account in their examination and enforcement efforts.
Clayton emphasized that financial professionals are never allowed to put their interests ahead of the interests of their clients and customers, something he said is a “bedrock principle” for more than 57 million investor households “in these times of economic uncertainty.”
“Reg BI establishes a new standard of conduct for broker-dealers and their associated persons when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer,” he concluded.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
