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May 17, 2019 at 11:34 AM
While the Securities and Exchange Commission has stated Regulation Best Interest’s goal is “to preserve the broker-dealer advice model,… that’s to say they are trying to save the broker-dealer business as we know it,” Robert Colby, FINRA’s chief legal officer, said Friday. “This is really an epical moment; a critical time for the regulation of broker-dealers.”
Recent reports have said that Reg BI and the agency’s advice standards package will be before the commission for a vote the week after Memorial Day, Colby stated during the last day of FINRA’s annual conference.
Colby, who moderated a panel discussion on top compliance and legal topics, queried panelists on what they’ll be watching for in Reg BI, which he said is “rumored to be very long.”
Evan Charkes, chief legal counsel for Merrill Private Wealth, said that Reg BI will usher in a “fundamental change to the retail brokerage model in terms of the standard of care.”
Charkes said that he will be looking to see if the SEC kept the same “framework” that was in the proposal. Will the SEC keep Reg BI’s disclosure of fees, care obligation, and disclosure and mitigation of conflicts obligations intact, he said, or “will it take one away or add a fourth?” Also, does the new Reg BI “use the word ‘fiduciary’? That would be a very important thing to look for right away.”
After that, he will look to see if “any definitions” have changed in the rule. For instance, regarding titles — the proposal’s goal to restrict broker-dealers’ use of the term “advisor.”
“That’ll be challenging if they follow through on that,” Charkes said.
