Regulatory Outlook | 01.03.22
Brokers Told to Brace for Surge in SEC Reg BI Enforcement
There are "strong indications" that SEC enforcement of Regulation Best Interest (Reg BI) is looming, according to Kurt Wolfe of Quinn Emanuel's SEC Enforcement Practice. He further noted that the regulator "has signaled that regulated firms may not be getting Reg BI right, and senior SEC officials have made it clear that they intend to take an expansive, perhaps aggressive, approach to Reg BI," which imposes a heightened best-interest standard on broker-dealers when they recommend securities transactions and investment strategies. Wolfe suggested the first wave of Reg BI enforcement will likely crack down on firms that have not implemented or improved policies and procedures to comply with the regulation. The second wave "will likely consist of more nuanced enforcement actions, challenging conduct where the application of Reg BI is less clear," he added.
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