Compliance Newsflash –September 4, 2019

September 5, 2019

The Countdown Is On! Building a Reg BI Compliance Program as Deadlines Loom

On September 3, 2019, JDSupra reported on June 5, 2019, that the SEC adopted a package of rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with broker-dealers and investment advisers. The focal point of this package is Regulation Best Interest (Reg BI), which establishes a “best interest” standard of conduct for broker-dealers and associated persons when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities, including recommendations of types of accounts. As part of the rulemaking package, the SEC also adopted new rules and forms to require broker-dealers and investment advisers to provide a brief relationship summary, Form CRS, to retail investors.

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Independent contractor status for brokers and advisers safe in California

On September 3, 2019, InvestmentNews reported that brokers and advisers in California who work as independent contractors and are registered with a broker-dealer have sidestepped the fight over employment status currently playing out in the California statehouse. Assembly Bill 5, which writes into law a strict test before companies can classify workers as contractors, cleared a key committee Friday in the state Senate, according to multiple news reports. It is expected to pass both houses of the legislature before lawmakers adjourn Sept. 13, and then Gov. Gavin Newsom is expected to sign the bill, according to the Los Angeles Times.

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