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Advocacy in action blog

NAIFA Past-President Paul Dougherty, along with representatives of the NAIFA government relations team, met with SEC Chairman Jay Clayton and key SEC staff April 15 to discuss the SEC’s proposed Regulation BI.

Reg BI would put in place an enhanced standard of care for broker-dealers and their registered reps, requiring them, when making recommendations  regarding securities transactions, to act in the best interests of their clients without putting their own interests ahead of the customer’s interests.

According to Dougherty, the topics discussed with the Chairman included the timeline for the release of a final rule, the possibility of a revised proposal with another round of comments, and the extent to which the final rule will differ from the original proposal.

While expressing general support for the best interest standard contained in Reg BI, Dougherty said that he and NAIFA staff emphasized to Chairman Clayton the importance of the rule being neutral with respect to support for or favoring a particular business model or compensation structure. Dougherty also raised NAIFA members' concerns about provisions in the proposed regulation that would impose restrictive limits on who can use the term "advisor/adviser," and cautioned the SEC officials that if required disclosures to clients are too lengthy or complex, then consumers would simply not read them.

"NAIFA has been a regular visitor with the SEC’s commissioners and staff, and these contacts help assure that NAIFA 'has a seat at the table' as these important and impactful rules and regulations are being developed," Dougherty said.