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February 06, 2024 at 01:46 PM
Regulation Best Interest will continue to be a “priority area” for the Financial Industry Regulatory Authority this year, according to the broker-dealer self-regulator’s enforcement chief, Bill St. Louis.
FINRA has “brought a number of cases involving the duty of care, excessive trading cases, cases involving products that were perhaps overconcentrated or products that were recommended to investors,” St. Louis said in just-released episode of FINRA’s Unscripted podcast. “But the brokers really didn’t understand key aspects of the product, which led to investor harm.”
Further, St. Louis explained, “there are a number of cases in the pipeline focused on the duty of care” as it relates to Reg BI compliance. “We also have brought and have other cases focused on other obligations of Regulation Best Interest. We have compliance obligation cases. We have disclosure obligation cases.”
An example are cases involving failures to disclose certain conflicts “that people at the firm were being compensated by an issuer or people at the firm had a financial interest in an issuer that was perhaps like a private placement being conducted by the firm,” St. Louis explained.
St. Louis succeeded Jessica Hopper last August as head of enforcement. Hopper stepped down last Feb. 3 after 18 years with the regulator.
