SEC Regulation Best Interest (Reg BI)
The SEC's Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934 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.
FINRA Statement on SEC’s OCIE Risk Alerts for Reg BI and Form CRS
On April 7, 2020, the SEC’s Office of Compliance Inspections and Examinations (OCIE) released Risk Alerts for Reg BI and Form CRS. These Risk Alerts set forth OCIE’s expectations for firms’ compliance with Reg BI and Form CRS and provide broker-dealers with information about the scope and content of OCIE’s initial examinations following the compliance date of June 30, 2020.
Read FINRA's statement.
Filing Form CRS
Firms that are required to file the Form CRS 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 published a 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
- Podcast: Regulation Best Interest: Implementing a New Standard of Conduct | Released July 7, 2020
- Virtual Conference Panel: Regulation Best Interest: Compliance Inspections and Examinations | Released May 12, 2020
- Virtual Conference Panel: Regulation Best Interest and Form CRS: Where Are We Now | Released May 6, 2020
- Podcast: Regulation Best Interest: Preparing for a New Standard of Conduct | Released October 15, 2019
- FINRA Small Firm Conference Call (The SEC’s Regulation Best Interest) | Recorded October 8, 2019
- 2019 FINRA Advertising Regulation Conference (Plenary Session: Regulation Best Interest and Current Developments) | Recorded October 24, 2019 – Session Available On Demand
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.
Frequently Asked Questions
On May 20, 2020, FINRA published an 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
- FINRA Amends Its Suitability, Non-Cash Compensation and Capital Acquisition Broker (CAB) Rules in Response to Regulation Best Interest
- FINRA Revises Rule 4530 Problem Codes for Reporting Customer Complaints and for Filing Documents Online
- Regulation Best Interest
- Capital Market InsightsAs of June 30, 2020, the U.S. Securities and Exchange Commission’s Regulation Best Interest—or Reg BI—is officially in effect. What does a post implementation-date world look like? And how is FINRA working to ensure a consistent approach to examining around and enforcing the new regulation? Tune in to learn more.July 07, 2020
- Virtual Conference PanelAttend this session to hear from OCIE, FINRA staff and industry experts as they discuss how they intend to examine and inspect for compliance with Reg BI, including a discussion of implementation challenges, frequently asked questions, and issues that are being considered.May 12, 2020
- Virtual Conference PanelAttend this session to hear from OCIE, FINRA staff and industry experts as they discuss how they intend to examine and inspect for compliance with Reg BI, including a discussion of implementation challenges, frequently asked questions, and issues that are being considered.May 06, 2020
- Capital Market Insights
FINRA hosted a Regulation Best Interest (Reg BI) conference on Dec.18, 2019 in Washington, D.C. for firms to discuss best practices and approaches. Approximately 500 compliance officers and other industry participants attended the one-day event focused on assisting firms as they gear up for the June 30, 2020 compliance date for the SEC’s Reg BI and Form CRS.January 08, 2020
- PodcastSoon brokerage firms will have to comply with a new standard of conduct when working with retail clients with the implementation of Regulation Best Interest. What is the new standard? What will firms need to do to comply? Tune in to learn more from FINRA’s Chief Legal Officer.October 15, 2019
- Investor EducationOn June 30, 2020, new rules take effect that are designed to help retail investors better understand and navigate their relationships with investment professionals and make informed choices about the type of relationship for their needs and circumstances. The new Securities and Exchange Commission (SEC) rules, among other things, enhance the standard of conduct broker-dealers must provide to their retail customers and require broker-dealers and SEC-registered investment advisers (RIAs) to provide a new relationship summary – Form CRS – to retail investors.