11.11.21

With Reg BI, "Think Broadly" About Recommendations: SEC's Lee

by: Melanie Waddell

SEC Commissioner Allison Herren Lee urged broker-dealers (BDs) to "think broadly" about how their communications with clients might be recommendations under Regulation Best Interest. In a recent speech, she said disclosure itself cannot sufficiently mitigate the potential impact of certain conflicts on recommendations, warning that BDs "should be thinking critically and carefully about the extent to which nascent practices in the industry may in fact, constitute recommendations." Lee cited emerging applications of technology as an area demanding close scrutiny, "especially when...used to engage and communicate with retail customers in a way that is reasonably likely or designed to influence investment or trading behavior, even if such influence is subtle."

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