The Securities and Exchange Commission said Thursday that it will not extend the June 30 compliance date for Regulation Best Interest and the Customer Relationship Summary form.
The agency believes firms with account relationships comprising “a substantial majority of retail investor assets have made considerable progress” in adjusting their business practices, supplementing and modifying their policies and procedures, and otherwise aligning their operations and preparing for compliance with Reg BI and Form CRS, SEC Chairman Jay Clayton said in a statement.
Based on the securities regulator’s engagement over the past 10 months with the industry “and because the continued implementation of these conduct and transparency initiatives, individually and collectively, will significantly benefit Main Street investors — we believe that the June 30, 2020 compliance date for Reg BI and other requirements, including the requirement to file and begin delivering Form CRS, remains appropriate,” Clayton said.
Firms, he continued, “should continue to make good-faith efforts around operational matters to ensure compliance” by June 30, including devoting resources as necessary and available in light of the circumstances, Clayton said.
To the extent that a firm is unable to make certain filings or meet other requirements because of disruptions caused by COVID-19, “including as a result of efforts to comply with national, state or local health and safety directives and guidance, the firm should engage with us,” Clayton added.
“I expect that the Commission and the staff will take the firm-specific effects of such unforeseen circumstances (and related operational constraints and resource needs) into account in our examination and enforcement efforts.”
Following the compliance date, SEC examiners will focus on whether firms have made “a good faith effort to implement policies and procedures necessary to comply with Reg BI, while also providing an opportunity to work with firms on compliance and other questions,” Clayton said.
The Office of Compliance Inspections and Examinations plans to release two Risk Alerts in the coming days. One provides broker-dealers with specific information about the scope and content of initial examinations for Reg BI. The other provides broker-dealers and investment advisors with similar information with respect to Form CRS.