WASHINGTON—FINRA today announced it has made available new resources to assist member firms in their efforts to comply with the Securities and Exchange Commission (SEC) Regulation Best Interest (Reg BI) and Form CRS by the rules’ compliance date of June 30, 2020. FINRA is assisting members in a variety of ways including by providing a new Reg BI and Form CRS Checklist – available on FINRA’s Reg BI webpage along with a number of other resources – and by hosting several FINRA Reg BI events in the coming months.
On June 5, 2019, the SEC adopted Reg BI under the Securities Exchange Act of 1934. Reg BI establishes a “best interest” standard of conduct for broker-dealers and associated persons when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities, including recommendations of types of accounts. The SEC also adopted a new rule to require broker-dealers and investment advisers to provide a brief relationship summary, Form CRS, to retail investors.
Robert Colby, FINRA Executive Vice President and Chief Legal Officer, said, “FINRA is committed to providing member firms with resources to assist in their implementation efforts.”
FINRA is providing a Reg BI and Form CRS Checklist to help members with their assessment and implementation of necessary changes to their policies, procedures and compliance programs in light of Reg BI and Form CRS. This checklist outlines the major requirements of the rules and notes key differences between FINRA rules and SEC’s Reg BI and Form CRS.
In addition, on December 18, 2019, FINRA is hosting a Reg BI Conference in Washington, D.C. The one-day event, free of charge to the first two attendees per firm, is designed to bring regulators, executives and industry practitioners together to learn more about Reg BI. A recording will be available on FINRA’s website following the event. Other upcoming FINRA events featuring Reg BI discussions include:
- FINRA Small Firm Report (The SEC’s Regulation Best Interest) | October 8, 2019
- 2019 FINRA Small Firm Conference | October 23-24, 2019 | Santa Monica, CA
- 2019 FINRA Advertising Regulation Conference | October 24-25, 2019 | Washington, DC
For additional details on FINRA’s Reg BI Conference or other events, including information on how to register for the events, visit FINRA’s website.
As with other SEC rules, FINRA will examine for and enforce compliance with Reg BI and, in doing so, FINRA will adhere to SEC guidance and interpretations. FINRA staff expects to work with SEC staff to ensure FINRA’s consistency in examining broker-dealers and their associated persons for compliance with Reg BI and Form CRS. In addition, FINRA will review FINRA rules to see whether changes are needed to align FINRA rules with the SEC’s rulemaking. Any proposed changes to FINRA rules will be filed with the SEC for public comment and available on FINRA’s website.
Firms may send their interpretive questions to IABDQuestions@sec.gov.