Date Set for SEC Regulation Best Interest Vote

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The Securities and Exchange Commission has set June 5, 2019, as the date it will vote on “Regulation Best Interest—Standard of Conduct for Broker-Dealers” commonly called Reg BI.

The announcement was made on the SEC’s website under its open meeting agenda.

Reg BI is a proposed rule under the Securities Exchange Act of 1934 that would establish a standard of conduct for broker-dealers when making investment recommendations.

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 ahead of the interest of the retail customer.

“The Commission will consider whether to adopt a new rule to establish a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities,” it said, noting it will be supervised by the Division of Trading and Markets.

Criticism

Fiduciary proponents have criticized the SEC’s proposal, believing it to be a watered-down version of a more stringent Department of Labor version, which announced that it will revisit the topic in December.

“It won’t be applicable immediately, though,” according to Fred Reish, an ERISA attorney and expert with legal powerhouse Drinker Biddle. “You’ll have a delayed implementation date anywhere from six to 12 months.”

June 5 will be a busy day for the SEC, as it will consider several other related provisions as well.

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