The Hill: SEC approves new rule for financial advisers, setting stage for legal challenge
The rule imposes a code of conduct for broker-dealers that requires them to prioritize the financial needs of customers over fees or commissions they would receive from selling a less suitable product.
The rule also instructs broker-dealers to mitigate or eliminate potential conflicts of interest by disclosing any financial incentives the broker has to sell certain products. The broker-dealer must also “exercise reasonable diligence, care, skill, and prudence” to ensure their recommended products are in the customer’s best interest.
The industry on Wednesday hailed the proposal.
“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,” said Chris Iacovella, president and CEO of the American Securities Association, a trade group for regional investment firms.
“This vote further solidifies Chairman Clayton’s investor-first legacy and re-establishes the SEC as the proper regulator of relationships between firms and their customers.”
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