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SEC Regulation Best Interest (Reg BI)

On June 5, 2019, the SEC adopted Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934. Reg BI establishes a “best interest” standard of conduct for broker-dealers and associated persons when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities, including recommendations of types of accounts.

As part of the rulemaking package, the SEC also adopted new rules and forms to require broker-dealers and investment advisers to provide a brief relationship summary, Form CRS, to retail investors. In addition, the SEC published interpretations concerning investment advisers’ standard of conduct under the Investment Advisers Act of 1940, and the “solely incidental” prong of the broker-dealer exclusion from the Advisers Act.

Firms must comply with Reg BI and Form CRS by June 30, 2020. The Advisers Act interpretive releases were effective on July 12, 2019.

 


SEC Resources

Visit the SEC's Reg BI Resource Page


FINRA Resources

 

Reg BI and Form CRS Checklist

FINRA is providing a Reg BI and Form CRS Checklist to help members with their assessment and implementation of necessary changes to their policies, procedures and compliance programs in light of Reg BI and Form CRS. This checklist outlines the major requirements of the rules and notes key differences between FINRA rules and SEC’s Reg BI and Form CRS.


Filing Form CRS

Firms that are required to file the Form CRS must do so by June 30, 2020, though they are permitted to begin filing now. Firms must file electronically using Web CRD® (for broker-dealers) or IARD (for dually registered firms). For information related to the filing process, please see FINRA’s quick reference guides for filing of Form CRS through Web CRD® and through IARD, and the SEC’s Form CRS FAQs.


Reg BI Preparedness Reviews Report

As part of FINRA’s continuing efforts to assist members with the implementation of Reg BI and Form CRS, FINRA has published a new report highlighting common practices FINRA observed during reviews that began in late 2019 and through ongoing conversations with firms of all sizes about their preparedness initiatives. The report is meant to help FINRA member firms assess their efforts against their peers.


Regulation BI Conference

FINRA’s Regulation Best Interest Conference, held on December 18, 2019, in Washington, DC, was a one-day event designed to bring regulators, executives and industry practitioners together to learn more about Regulation Best Interest (Reg BI).  View the full conference video and read about conference highlights.


On-demand Events/Programs featuring Reg BI Discussions


 

Frequently Asked Questions

FINRA has published a new FAQ to address whether firms are required to re-file with FINRA retail communications that eliminate references to "adviser" or "advisor" in order to comply with the SEC’s Regulation Best Interest.


FINRA Staff Contacts

  • James S. Wrona, Vice President and Associate General Counsel, Office of General Counsel (OGC), at (202) 728-8270;
  • Meredith Cordisco, Associate General Counsel, OGC, at (202) 728-8018; or
  • Joseph P. Savage, Vice President and Counsel, Office of Regulatory Analysis, at (240) 386-4534.

 

17 CFR 240.15l-1
Regulation Best Interest


17 CFR 240.17a-3
Records to Be Made by Certain Exchange Members, Brokers and Dealers


17 CFR 240.17a-4
Records to Be Preserved by Certain Exchange Members, Brokers and Dealers


17 CFR 240.17a-14
Form CRS, for Preparation, Filing and Delivery of Form CRS


17 CFR 249.641
Form CRS, Relationship Summary for Brokers and Dealers Providing Services to Retail Investors, Pursuant to §240.17a-14 of This Chapter