Financial Advisor IQ: It’s Official! SEC Pushes Through with Regulation Best Interest Standard for Broker-Dealers

Ahead of today’s vote, the American Securities Association issued a statement lauding the SEC’s Reg BI for strengthening investor protection, improving accountability across the financial industry and instilling greater confidence in investors.

“By finalizing Reg BI and strengthening investor protections, the Commission will bring certainty to Main Street investors, working families saving and investing for a better future, and financial professionals across the country who do the right thing every day,” according to the ASA.

ASA also warns states pushing for fiduciary rules for broker-dealers – which the lobby group for financial services companies describes as “largely motivated by politics” – to back off.

The states “should recognize” that Reg BI “sets a national standard and must refrain from creating a patchwork of unworkable regulations that will directly harm investors and their local economies,” ASA says.

According to ASA, Reg BI improves investor protection by requiring financial firms and professionals to:

  • Put their customers’ interests first by not placing their own interests ahead of their clients’ interests;
  • Disclose necessary facts about relationships, including fees and compensation related to financial products they recommend;
  • Exercise diligence, care and skill when making recommendations of investment products; and
  • End high-pressure sales practices.

New Jersey, Nevada and Connecticut are among the states which have also set forth their own fiduciary rule initiatives after the Department of Labor’s fiduciary rule was vacated in Federal court last year. In April, the Maryland Senate Finance Committee overwhelmingly voted to recommend the rejection of a pending fiduciary bill that would have held brokers and related individuals to those standards.

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