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December 06, 2019 at 02:07 PM
The Securities and Exchange Commission’s two Democratic members agreed Friday that the industry will need guidance from the securities regulator on how to comply with Regulation Best Interest before it goes into effect on June 30, 2020.
Both, however, questioned whether FAQs would be enough.
Barbara Roper, director of investor protection for the Consumer Federation of America, probed SEC Commissioners Allison Herren Lee and Robert Jackson during a question-and-answer session at the federation’s financial services conference in Washington on whether the agency will provide “any clarity around” best interest and what it means to mitigate conflicts — two aspects of Reg BI that Roper argued “determine whether the standard actually delivers any protections for investors.”
Lee, who reminded attendees that she was not on the commission when it adopted Reg BI and the advice-standards package on June 5 — as she was sworn in on July 8 — stated she “was disappointed” with Reg BI. “It is not the rule that I would have written,” she said.
That said, Lee responded that she’s “hopeful” the agency will provide clarity. “We have a chair who’s said this best-interest standard is supposed to substantially enhance the obligations of broker-dealers. So I take heart from that.”
Jackson, who voted against the agency’s advice-standards package, gave an unequivocal “no” on whether he thought the agency would “take steps to clarify the things that were not clear” in Reg BI.
“There are going to be enforcement decisions that will have to be made,” Jackson said. “There’s going to have to be guidance that will be given to broker-dealers engaged in certain types of activity.”
