03.18.20

FINRA Board Member Chris Flint on Reg BI: Failure Is Not an Option

by: Rich Blake

ProEquities CEO and FINRA board member, Chris Flint, told BISA Portfolio that based on the feedback he has received from people within his firm and around the industry, the push to comply with new client advice rules is full-steam ahead.

“There's no grading curve,” Flint said. “As I told my team, this is pass/fail."

The deadline for the new Securities and Exchange Commission (SEC) rules, known as Regulation Best Interest, or “Reg BI," is June 30.

Coordination and communication are the two most crucial factors coming into play as the clock continues to tick, Flint said.

"There's so much work to be done,” he said. “Although some of it is already in place going back to when there was preparation for the ultimately shelved DOL rule. My sense is the industry will be ready. But right now it's certainly all hands on deck.”

Compliance challenges weren't exactly softened toward the end of February with the North American Securities Administrators Association distributing a multi-state Reg BI survey to firms, requesting detailed information about accounts/assets. The turnaround time is tight and industry groups are pushing back, said Ben Marzouk, an attorney with Washington, D.C.-based Eversheds Sutherland. "Our sense is that the state securities regulators are holding firm in requiring firms to complete the survey," he said.

Broadly speaking, Reg BI applies whenever a BD representative executes any transaction on behalf of a retail client. The rules require formal steps be taken to make sure that the action is in the client's best interest.