The Securities and Exchange Commission has approved FINRA’s plan to amend its suitability and noncash compensation rules to provide clarity on which standard applies and to address inconsistencies with Regulation Best Interest.
Reg BI establishes a “best interest” standard of conduct for broker-dealers and associated persons when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities, including recommendations of types of accounts.
As the Financial Industry Regulatory Authority, or FINRA, explains, among other things, Reg BI incorporates and enhances principles that are also found in FINRA Rule 2111, its Suitability rule.