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October 17, 2018 at 01:56 PM
The Securities and Exchange Commission’s proposed Regulation Best Interest for brokers would “make it substantially easier” for the securities regulator to bring enforcement actions against brokers “who have subordinated their clients’ interests to their own,” according to SEC Commissioner Hester Peirce.
Peirce, a Republican, also told financial planners during a recent speech that the SEC’s advice standards package’s Customer Relationship Summary form, or Form CRS, while “replete with legal terminology,” would serve as “a great place to start advancing a digital-based disclosure system.”
Some of the Reg BI “put-downs” the agency has received “seem to ignore the text of the proposed rule and the limits of the fiduciary regime,” Peirce stated.
Reiterating her previously stated views, Peirce explained that many of the Reg BI critiques “are based on the assertion that because broker‑dealers would not be subject to the same fiduciary duty to which advisors are subject, broker-dealers’ conflicts of interest with clients would continue to exist to the detriment of their clients.”
Under Reg BI, some have complained, “broker-dealers would ‘only’ have to mitigate and disclose the conflicts of interest but could continue to give advice colored by the conflicts.”
However, she stated, “the requirements addressing conflicts of interest included in proposed Regulation Best Interest are stronger than those required by an investment advisor’s fiduciary duty to its client.”
Proposed Reg BI would require “disclosure and at least mitigation of any material financial conflict of interest a broker-dealer may have with its client. An advisor is required only to disclose such a conflict.”
