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Investors Push for More Clarity in Regulation Best Interest, While SEC Chair Speeds Up its Release

November 2, 2018

An SEC committee representing investors wants the commission to "strengthen and clarify"its proposed Regulations Best Interest, InvestmentNews writes.

The majority of the SEC’s Investor Advisory Committee, which is a volunteer group, believes the regulator needs to clarify its definition of “best interest,” the IAC says in a statement cited by the publication.

"Specifically, we believe the meaning of the best interest obligation should be clarified to require broker-dealers, investment advisers and their associated persons to recommend the investments, investment strategies, accounts or services, from among those they have reasonably available to recommend, that they reasonably believe represent the best available options for the investor,” the IAC says, according to InvestmentNews.

The IAC says the commission should also characterize the best interest standard “explicitly as a fiduciary duty” while clarifying that how that duty is adhered to will vary by different business models, the publication writes.

The committee also wants the SEC to expand Regulation Best Interest to cover more types of accounts, including retirement rollover accounts, according to InvestmentNews.

According to sources, the issue has yet to be voted on in the full committee. A vote is scheduled for a meeting Wednesday, Nov. 7.

Both the Certified Financial Planner Board of Standards and the Investment Adviser Association tell the publication they support the IAC’s recommendations. The Financial Services Institute, which represents independent broker-dealers, did not respond to InvestmentNews’ request for comment. The IAC is scheduled to vote on its recommendations Nov. 7, the publication writes.


Meanwhile, SEC chairman Jay Clayton tells ThinkAdvisor the September 2019 deadline for Regulation Best Interest isn’t merely a placeholder as some in the industry have suggested.

The advisor and broker conduct rules and “related matters” are on the SEC’s short-term regulatory agenda, the chairman says, according to the publication.

“We’re aiming to get them done by September, if not sooner. We’re working on it virtually continuously,” he tells ThinkAdvisor.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.
  • To read the ThinkAdvisor article cited in this story, click here.