Compliance Newsflash – July 10, 2019

July 10, 2019

Regulation Best Interest and the Investment Adviser Fiduciary Duty: Two Strong Standards that Protect and Provide Choice for Main Street Investors

On July 8, 2019, SEC  Chairman Jay Clayton stated, “As many of you know, in June, the Securities and Exchange Commission adopted a package of rules and interpretations that will enhance the quality and transparency of retail investors’ relationships with broker-dealers and investment advisers. Importantly, they bring the legal requirements and mandated disclosures for broker-dealers and investment advisers in line with reasonable investor expectations. These actions do not attempt to favor one type of service or relationship. Rather, they are designed to increase investor protection while preserving access for Main Street investors-both in terms of choice and cost-to a variety of investment services and products.”

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Joint Statement on Broker-Dealer Custody of Digital Asset Securities

On July 8, 2019, FINRA reported that market participants have raised questions concerning the application of the federal securities laws and the rules of the Financial Industry Regulatory Authority (“FINRA”) to the potential intermediation-including custody-of digital asset securities1 and transactions. In this statement, the staffs of the Division of Trading and Markets (the “Division”) and FINRA (collectively, the “Staffs”)-drawing upon key principles from their historic approach to broker-dealer regulation and investor protection-have articulated various considerations relevant to many of these questions, particularly under the SEC’s Customer Protection Rule applicable to SEC-registered broker-dealers.

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