Attorneys for XY Planning Network on Tuesday ripped into the Securities and Exchange Commission’s Regulation Best Interest in a brief before the U.S. Court of Appeals for the 2nd Circuit.
XYPN attorneys said in the brief that the “fundamental purpose” of Securities and Exchange Commission’s Regulation Best Interest is “to carve up the market for investment advice and introduce new standards to govern the actions and disclosures of broker-dealers as distinct from registered investment advisors.”
In their 38-page reply brief to the SEC’s March 3 response brief, XYPN attorneys from Gupta Wessler argue that Reg BI is “premised on an unreasonable understanding of the activities and laws separating” advisors and broker-dealers.
The result, XYPN maintains, “is that entire businesses will be subject to Regulation Best Interest as broker-dealers when they should be regulated as investment advisers. The regulation therefore ‘cannot stand as promulgated.’”
In its response brief, SEC attorneys argued that Reg BI should stand because it “reasonably balances” the SEC’s regulatory objective, and reflects the agency’s concern that “requiring broker-dealers to conform to a regulatory regime that is tailored to the services and fee arrangements offered by investment advisors would reduce the availability of brokerage services.”
But XYPN argues in its Tuesday brief that Reg BI “is just the latest in a series of attempts by the SEC to exceed or misapply its regulatory authority in ways that have required judicial scrutiny.”