Insights from Winston & Strawn
In preparation for the September 10, 2019, effective date of the Securities and Exchange Commission’s (“SEC”) Regulation Best Interest (“Reg BI”), we wanted to highlight some remarks made by SEC Chairman Jay Clayton on July 8. For example, we have noticed a perception in the industry that the standard of conduct created by Reg BI can be satisfied by disclosure alone, but Clayton emphasized that the regulation establishes a general obligation for a broker-dealer to act in the best interest of the retail customer at the time an investment recommendation is made, without placing the financial or other interest of the broker-dealer ahead of the interests of the retail customer. In fact, four specific pillars must always be addressed: Disclosure, Care, Conflicts of Interest, and Compliance.
Clayton also emphasized that the “best interest” standard is similar to the standard already applicable to investment advisers. Neither investment advisers nor broker-dealers are required to recommend the single “best” product under Reg BI; Clayton admitted that many different options may be suitable for a particular investor and the “best” product is likely to be known only in hindsight. This clarification should make compliance clearer for clients that are already registered as investment advisers or are familiar with that regulatory framework.
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Disruptive Technology: Understanding the Risks and Rewards
Co-authored by Winston partners Basil Godellas, Amanda Groves, Michael Loesch, Susannah Torpey, Kathi Vidal, and Danielle Williams, this white paper is based on a survey conducted in February 2019 by ALM’s Corporate Counsel — in conjunction with Winston — to capture the thoughts and opinions of legal and IT professionals regarding the legal and regulatory impact of disruptive technologies in the financial services industry.