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Regulatory Update

Reg BI and beyond: New news on the regulatory front.

States vs. SEC – Oral Arguments: The Reg BI June 30, 2020 compliance date is expected to remain firm. However, it is not without controversy. Two lawsuits were brought – by the states of New York, California, Connecticut, Delaware, Maine, New Mexico, Oregon and the District of Columbia, and by XY Planning Network – seeking to vacate and set aside Reg BI. Oral arguments entertained by a three-judge panel of the Second Circuit on June 2, 2020 marked the next step in this process. It is not known if the panel will rule prior to June 30, 2020.

Massachusetts Securities Division Fiduciary Rule: Citing weaknesses in Reg BI, Massachusetts enacted its own stricter fiduciary rule on March 6, 2020. The Massachusetts rule is slated to take effect September 1, 2020. It stipulates that investment advice be "without regard to the financial or any other interest of any party other than the customer." It also prohibits all sales contests. Other states are also contemplating their own rules. New Jersey, for one, held public hearings on their proposal in July and November 2019, but then delayed this and other rulemaking due to the COVID-19 pandemic, planning to resume toward final rulemaking 90 days after it lifts its state emergency declaration.

New DOL Fiduciary Rule: On June 1, 2020, the DOL sent its latest fiduciary-rule proposal to the White House’s Office of Management and Budget. While expected to align with Reg BI, details of this new rule proposal are not yet known. The rule proposal will be reviewed by the OMB before publication for a public comment period. This process can take 60 to 90 days.

SEC Public Statement on Reg BI: On June 15, 2020, SEC Chairman Clayton issued a public statement confirming the June 30, 2020 Reg BI compliance date. In it, he highlighted the importance of implementing Reg BI as soon as possible, outlining key areas where increased care may be necessary when making recommendations to main street investors amidst the uncertainties of the COVID-19 pandemic. He also introduced a new SEC webpage designed to help main street investors understand the role of Form CRS and Reg BI.

National, State and Local Elections: November will quickly be upon us. The outcome of the upcoming elections may determine the fate of upcoming fiduciary rules and regulations. For example, the prior version of the DOL fiduciary rule was proposed under the Obama administration, then delayed and subsequently rescinded under the Trump administration.

Learn more

Broadridge continues to keep a finger on the pulse of Reg BI, the DOL and independent state proposals. Working closely with RIAs, independents, broker-dealers and regulators, we are helping to accelerate preparation, automate execution and streamline compliance both for June 30th and beyond.

To discover how you can step up to Reg BI compliance with greater efficiency and confidence, talk to Broadridge today.

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