The Securities and Exchange Commission on Tuesday Released two risk alerts detailing the scope and content of exams for compliance with Regulation Best Interest and the Customer Relationship Summary form.
SEC Chairman Jay Clayton announced Thursday that the agency would not extend the June 30 compliance date for Reg BI and Form CRS.
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, Clayton said in a statement.
Initial Reg BI exams will focus on assessing whether broker-dealers have made a good-faith effort to implement policies and procedures reasonably designed to comply and that are effective, the Reg BI Risk Alert explains.
Form CRS exams will assess whether firms have made a good-faith effort to implement the form, “including reviewing the filing and posting of a firm’s relationship summary as well as its process for delivering the relationship summary to existing and new retail investors,” the Form CRS Risk Alert says.
After the June 30 compliance date, OCIE exams to assess implementation of Reg BI “will likely occur during the first year after the compliance date” and are designed primarily to evaluate whether firms have established policies and procedures reasonably designed to achieve compliance, the Reg BI alert explains.