News | 05.13.20
Advisor or Broker: The Clarity the Industry Needed From the SEC
The SEC followed a course it had favored for a long time when it issued in late April an update to its FAQ for Regulation Best Interest, according to Bradley Bennett, a lawyer who served as FINRA chief of enforcement from 2011 to 2017. In that update, the SEC clarified that it will not tolerate brokers calling themselves “advisors” unless they’re registered as investment advisors, and in certain other cases, Bennett notes. “Confusing titles has long been an area of focus for the SEC,” he says. “They don’t want people confused about exactly what model they are operating in.” The SEC says in the update that brokers who use the terms “adviser” or “advisor” in their titles or their firms’ names without being registered as investment advisors will be in violation of the rule’s disclosure obligation. Reg BI’s compliance deadline remains June 30 despite the COVID-19 pandemic. Previously, the SEC didn't “expressly prohibit” brokers from using the terms, even though doing so “creates a presumption of a violation of the Disclosure Obligation,” the regulator says.
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