On June 15, Securities and Exchange Commission Chairman Jay Clayton made a public statement (Statement) covering several topics related to Regulation Best Interest (Reg BI) and Form CRS. Chairman Clayton confirmed that the compliance date for Reg BI and Form CRS will be June 30, 2020 and emphasized the SEC’s focus on issues related to Main Street investors, including the creation of a new investor-focused resource to assist such investors with reviewing the Form CRS and researching firms and financial professionals.
Noting the ongoing effects of the COVID-19 pandemic and various related actions, Chairman Clayton emphasized that under Reg BI and the Investment Advisers Act of 1940, as amended, broker-dealers and investment advisers should review their operations to ensure the best interests of retail investors are being addressed when making recommendations or providing investment advice to such investors. In particular, Chairman Clayton noted that firms should focus on recommendations and advice related to the following: (1) rollovers and withdrawals from 401(k) and other plans; (2) complex or risky products (including significantly leveraged products that rely on derivatives strategies to enhance returns, or those that focus on investments in less liquid and more volatile markets); (3) COVID-related investments; and (4) special purpose acquisition companies and other structured investment vehicles.
A copy of the Statement is available here.