SEC and FINRA Should Harmonize Rules Around Reg BI

Reg BI is a strong national standard that includes significant investor protections and establishes clear rules for broker-dealers

WASHINGTON – The American Securities Association today sent a letter to the Securities and Exchange Commission (SEC) commenting on the Financial Industry Regulatory Authority’s (FINRA) proposal to amend its suitability rules in response to Regulation Best Interest.

“Reg BI is a strong national standard that includes significant investor protections and establishes clear rules for broker-dealers, without crippling business models that have served investors well for years,” ASA CEO Chris Iacovella wrote in the letter. “Having a national standard has become increasingly important given efforts by certain states to undermine Reg BI by adopting their own conflicting standards which confuse investors, increase costs, and reduce access to advice.”

“The adoption of Reg BI requires FINRA to update its own rulebook to align its rules with the new national standard. Without doing so, a broker would technically be required to demonstrate compliance with both Reg BI and the suitability rules under FINRA Rule 2111,” Iacovella wrote. “We appreciate the work by FINRA in the Proposal to limit the application of Rule 2111 to “circumstances in which Reg BI does not apply,” such as broker dealer interactions with institutional investors.”

To read the full letter, click here.

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