SEC Approves Advice Rule, but is it enough to Protect Investors?
According to reports, the Securities and Exchange Commission on Wednesday adopted a four-part package of regulations, including Regulation Best Interest, aimed at reforming investment advice standards for brokers and financial advisors.
Regulation Best Interest, a new regulation that calls for brokers to act in the best interest of their clients when making investment recommendations, was approved by commissioners in a 3-to-1 vote.
The regulatory package reportedly includes the new Form CRS relationship summary and two separate interpretations under the Investment Advisers Act of 1940.
According to reports, critics warn that the rule fails to eliminate conflicts of interests. Commission-based pay or other financial arrangements could still cost investors while benefiting brokers.
Compliance of broker-dealers will reportedly include making required disclosures and giving attention to conflicts that could lead a broker to make a recommendation that is not in the client’s best interest.
Further, a “relationship summary form”, will be a required disclosure and will include pertinent information such as the fees charged, services offered, conflicts of interest and whether the firm and its financial professionals have a history of legal or disciplinary actions.
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[maxbutton id=”1″ ]Tags: Advice rule, Regulation best interest, SEC, Securities Attorney Last modified: June 6, 2019