The SEC will be voting on approving Reg Best Interest and related proposed regulations at an open meeting on June 5.
As our readers and followers know, the SEC is moving ahead with its own fiduciary standard Rule, as authorized by Dodd-Frank section 913(g)(1). Specifically, the SEC published in the Federal Register in May 2018 three proposals to establish a uniform fiduciary standard: Regulation Best Interest, Vol. 83, No. 90, Page 21574 (17 CFR Part 240); Standard of Conduct for Investment Advisers, Vol. 83, No. 90, Page 21203 (17 CFR Part 275); and Form CRS Relationship Summary and Form ADV, Vol. 83, No. 90, Page 21416 (17 CFR Parts 240, 249, 275 and 279). Publication triggered a 90-day public comment period for all three that expired August 2018. The SEC received over 6,000 comments (3,000 of which were unique) on Reg BI and related materials (see SAA 2018-31 (Aug. 15) for our analysis of the thousands of comments received).
Proposed Regs Cued Up for a June 5 Vote
The Commission on May 23 announced it will be holding a June 5 Open Meeting at which the Commission will consider four items (ed: repeated verbatim): 1) Whether to adopt a new rule to establish a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation to a retail customer of any securities transaction or investment strategy involving securities. 2) Whether to adopt new and amended rules and forms to require registered investment advisers and registered broker-dealers to provide a brief relationship summary to retail investors. 3) Whether to publish a Commission interpretation of the standard of conduct for investment advisers. 4) Whether to publish a Commission interpretation of the "solely incidental" prong of section 202(a)(11)(C) of the Investment Advisers Act of 1940.
Unclear About Changes for the Short-Staffed Commission to Consider
Neither the Meeting Notice nor the Agenda indicates whether there have been any changes resulting from the staff’s review of the thousands of comment letters. We expect that question to be answered as materials are posted closer to June 5. Also, the Commission will be short-staffed due to the vacancy created by the January 2019 departure of Kara M. Stein. President Trump on April 2nd nominated Democrat Allison H. Lee to a five-year term as SEC Commissioner to fill the vacancy, but the Senate has yet to act. The current roster is Jay Clayton (chair); Robert L. Jackson, Jr. (Democrat); Hester M. Peirce (Republican); and Elad L. Roisman (Republican).
(ed: *The meeting will take place starting 10 a.m. in Auditorium LL-002 at the Commission’s Washington, D.C. headquarters, 100 F Street, NE. It will also be Webcast live. **As reported elsewhere in this Alert, the Department of Labor has updated its Spring Regulatory Agenda to indicate that the DOL’s final fiduciary standard rule will be proposed in December 2019. Both agencies promised to coordinate their efforts.) (SAC Ref. No. 2019-21-01)
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