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SEC issues guidance related to retail investors’ relationships with financial professionals

  • SEC document Image

Jun 05, 2019

The SEC has adopted a package of rules, forms, and interpretations to improve retail investors’ relationships with broker-dealers and investment advisers.

The package includes:

  • “Regulation Best Interest” — Establishes a “new standard of conduct specifically for broker-dealers that substantially enhances the broker-dealer standard of conduct beyond existing suitability obligations.”
  • Form CRS Relationship Summary — Requires investment advisers and broker-dealers “to deliver a relationship summary to retail investors at the beginning of their relationship.”
  • Investment adviser interpretation — Reaffirms and clarifies “the Commission’s views of the fiduciary duty that investment advisers owe to their clients under the Advisers Act.”
  • “Solely incidental” interpretation — Confirms and clarifies that a “broker-dealer’s advice as to the value and characteristics of securities or as to the advisability of transacting in securities falls within the ‘solely incidental’ prong of this exclusion if the advice is provided in connection with and is reasonably related to the broker-dealer’s primary business of effecting securities transactions.”

For more information, see the press release on the SEC’s Web site.

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