best interest standard

Subscribe to best interest standard via RSS

On August 8, the UK Financial Conduct Authority (FCA) published a “Dear CEO” letter concerning cross-border booking arrangements.

In the letter, the FCA explains that the UK’s impending withdrawal from the EU has resulted in firms needing to put in place contingency plans that, when executed, will impact current business models, legal entity strategies and booking arrangements. The FCA states that it appreciates the information firms have already provided to it on their plans, and reminds firms of the importance of continuing to provide all necessary information. The FCA further states that firms should not make decisions without first speaking to the FCA.
Continue Reading FCA Publishes Dear CEO Letter on Cross-Border Booking Arrangements

On July 11, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission issued a Risk Alert to provide investment advisers and other market participants with information concerning many of the most common deficiencies that OCIE staff has found in recent examinations of investment advisers’ compliance with their best execution obligations under the Investment Advisers Act of 1940 (the “Advisers Act”). The Advisers Act best execution obligation requires an investment adviser to execute securities transactions for clients in such a manner that the client’s total costs, or proceeds in each transaction, are the most favorable under the circumstances taking into consideration the full range and quality of a broker-dealer’s services including, among other things, the value of research provided as well as execution capability, commission rate, financial responsibility, and responsiveness to the investment adviser. Furthermore, an investment adviser should periodically evaluate the execution quality of broker-dealers executing their clients’ transactions.
Continue Reading OCIE Issues Risk Alert on Compliance Issues Related to Best Execution by Investment Advisers

On May 22, Brett Redfearn, the Director of the Securities and Exchange Commission’s Division of Trading and Markets spoke at the Financial Industry Regulatory Authority’s Annual Conference regarding the newly proposed Regulation Best Interest. (For a more complete discussion of Regulation Best Interest, please refer to Katten’s “SEC Proposes Fiduciary Rule for Broker-Dealers” advisory, available here.) Director Redfearn noted that he views Regulation Best Interest as a “significant change from the status quo for broker-dealers that provide advice” that builds upon current regulations. He further noted that Regulation Best Interest tries to achieve two goals: (1) enhancing the quality of broker-dealer recommendations to retail customers; and (2) preserving the “pay as you go” model as a viable choice for investors seeking recommendations about securities.
Continue Reading SEC Division of Trading and Markets Director Gives Remarks Regarding Regulation Best Interest

On April 18, the Securities and Exchange Commission proposed a new rule under the Securities Exchange Act of 1934, creating a standard of conduct for registered broker-dealers who make recommendations of securities transactions or investment strategies involving securities to a retail customer. The best interest standard requires broker-dealers to act in the best interest of the retail customer at the time a recommendation is made, without placing the interests of the broker-dealer ahead of the interest of the retail customer.
Continue Reading SEC Proposes Best Interest Standard for Broker-Dealers