SEC Regulation Best Interest and Form CRS

SEC Regulation Best Interest (Reg BI) compliance is an expansive regulatory challenge that impacts the fundamental business structure of financial services organizations as it creates new regulatory and compliance risks. The development of core Reg BI compliance and supervisory components will help firms address the burden of compliance departments in the broker-dealer industry.

Reg BI went into effect June 30, 2020 and sets new conduct standards for broker-dealers. To ensure Reg BI compliance, broker-dealers must adhere to a package of rules and interpretive guidance directing them to act in the “best interest” of their clients. The package also includes new compliance requirements and guidance for both broker-dealers and investment advisers concerning the new obligations owed to retail investors.

 

How Bates Compliance Can Help

Bates Group’s Compliance team helps firms navigate and achieve compliance with Reg BI and Form CRS, including:

• Disclosure obligations
• Duty of care obligations
• Conflicts of interest obligations
• Additional compliance obligations

We can assist you with:

• Developing and reviewing Reg BI Client Relationship Summary (“Form CRS”)
• Conflicts of interest assessment
• New product approval processes
• Drafting new policies and procedures
• Training for compliance and sales professionals on how to comply with Reg BI and Form CRS

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As financial firms are starting to face the first round of enforcement actions from regulators under Regulation Best Interest (Reg BI), the “grace period” that followed the rule’s implementation date has come to an end.

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Here's What The Regulators Are Focusing On Now:

• SEC 2023 Exam Priorities Comparison Chart and Summary: New Marketing Rule, Reg BI and Private Funds Top this Year’s List – 02-20-23

• FINRA and SEC Increase Focus on Reg BI Compliance – What You Need to Know – 02-10-23

• FINRA 2023 Exam and Risk Monitoring Report with Bates Chart and Summary – Prioritizing the Priorities – 01-24-23

• SEC FY2022 Enforcement Division Report: Regulator Raises Penalties to Increase Deterrence – 12-02-22
• Seeking to Integrate Reg BI Standards, NASAA Proposes Revisions to REITs and Other Guidelines – 09-16-22
• SEC Staff Offers Additional Guidance on BD and IA Conflicts of Interest – 08-18-22
• SEC Targets More Firms for Form CRS Failings: Is Your Firm Next? – 02-28-22
• SEC Issues New Guidance on Form CRS Disclosures – 01-06-22
• NASAA Survey Reveals Some Firms Not Operating Under Reg BI One Year Later – 11-18-21
• SEC Director Advocates for “Proactive Enforcement” as Challenges Develop for Reg. BI – 10-29-21
• Regulators Get Tough on Reg BI and Form CRS Phase Two Compliance – Part 2: Reg BI – 06-04-21
• Regulators Get Tough on Reg BI and Form CRS Phase Two Compliance – Part 1: Form CRS – 06-03-21

• Friday, December 9, 2022 - Webinar: Reg BI Compliance What You Need to Know to Stay Ahead - Presented by Bates and NICE Actimize

• DOL Releases New Guidance on Cybersecurity and on Exemptions for Investment Advice Fiduciaries – 05-06-2021
• SEC 2021 Exam Priorities: Climate Change, Reg BI, Disclosures and Information Security Top the List – 03-12-21
• SEC and FINRA Offer Observations to Improve Compliance with Reg BI and Form CRS – 11-02-2020