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SEC’s Regulation BI to Undergo Scrutiny in March 14 Congressional Hearing

Brian Anderson

What’s next for the SEC’s controversial Regulation Best Interest proposal?

Probably plenty of pointed questions at a Congressional hearing in mid-March.

Congresswoman Maxine Waters (D-CA), the new Chairwoman of the House Financial Services Committee, announced on Monday that the Subcommittee on Investor Protection, Entrepreneurship and Capital Markets will convene a hearing, titled, “Putting Investors First? Examining the SEC’s Best Interest Rule,” on Thursday, March 14, in Washington D.C.

Congresswoman Maxine Waters

Waters is expected to grill SEC Chairman Jay Clayton after being among 35 House Democrats who previously complained to the SEC that Regulation BI doesn’t go far enough and is not a true fiduciary standard.

Reg BI’s standards of conduct package proposal includes:

  • A proposed standard of conduct for investment advisers that states advisers have a duty to act and provide advice that is in the best interest of the client.
  • The best-interest standard, which compels brokers to put clients’ financial interests ahead of their own and requires them to mitigate financial conflicts;
  • The client relationship summary, or Form CRS, which necessitates that firms disclose to retail investors the nature and scope of their services, the types of fees customers would incur, the conflicts of interest faced by the firm and the firm’s disciplinary history.

The proposal was approved by the SEC in April 2018 and generated more than 6,000 comments by the end of the comment period early last August. The SEC is aiming to issue its final rule on the Regulation BI package by September 2019.



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