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Advocacy in action blog

SEC Chairman Jay Clayton issued a statement June 15 reminding financial firms and advisors of the new, enhanced conduct standards found in Regulation Best Interest. Reg BI requires broker-dealers and their representatives to act in the best interest of their clients when making recommendations, and to not put the firm’s or representatives’s financial interests ahead of the consumer’s.

In light of the recent market volatility and investment strategies being marketed in response to the COVID-19 pandemic, Clayton noted that firms and representatives should pay particular attention to Reg BI compliance in connection with making recommendations regarding withdrawals or rollovers from 401(k) and other retirement plans. Clayton emphasized that recommendations to rollover or transfer assets “should be approached with care,” and cautioned that “firms should be particularly attuned to their regulatory obligations in light of the additional flexibility Congress recently provided investors to take withdrawals from certain accounts.” Reg BI goes into effect on June 30.