Attention Broker-Dealers: Announcing SEC Roundtable on Regulation Best Interest and Form CRS

October 26, 2020, 1 PM – 3 PM Eastern time, Virtual

It’s coming up soon! Broker-dealers and financial advisers, take notice! 

We are glad to report that the Staff Standards of Conduct Implementation Committee of the Securities and Exchange Commission (SEC) has announced a virtual roundtable to discuss how compliance with Form CRS and Regulation Best Interest is proceeding across the industry. Personnel from FINRA, the Office of Compliance Inspections and Examinations, the Division of Trading and Markets, and the Division of Investment Management will participate in this virtual roundtable on October 26, 2020, from 1 PM to 3 PM eastern time. The event will be open to the public through both a live webcast and an archived replay.

Background: Regulation Best Interest and Form CRS

It’s important to note that although Regulation Best Interest and Form CRS have been around for over a year, June 30, 2020, was the actual compliance date. Here’s why these new rules DO matter.

Regulation Best Interest, or Reg BI, prohibits an investment adviser or broker-dealer from considering their own financial or other interests above their clients’ interests. Furthermore, Reg BI requires them to eliminate or disclose any existing conflicts of interest. Crucially, to comply with Reg BI, these financial professionals must adequately demonstrate their efforts to the SEC. For instance, they must show how they develop an investment profile for each customer and act in the customer’s best interests.

Form CRS requires investment advisers and broker-dealers to produce and disseminate a relationship summary that will disclose critical details about their service offerings and fees in one transparent document to inform retail investors. Relationship summaries must be filed with the SEC, disseminated to all investors, and posted on the firm’s public website, assuming the firm has a web presence. Form CRS requires some very specific disclosures, including any disciplinary history, cash and non-cash compensation for advisers at the firm, and other interest information to investors.

Main Benefits of Attending the Roundtable

Both Form CRS and Regulation Best Interest lead to staff reviews by the SEC that can get quite involved, and many investment firms are not sure what to expect from these new proceedings. SEC staff conduct reviews to promote high-quality, transparent financial communications. We encourage you to attend this upcoming virtual roundtable to get the inside scoop on SEC processes. The SEC has promised to update its website with additional information on participation as the date gets closer.

Furthermore, both Reg BI and Form CRS may affect our VerifyInvestor.com clients, especially if they issue private placement offerings under SEC Rule 506(c) of Regulation D. Although these issuers are permitted to publicly advertise or solicit their offerings when they utilize this SEC registration exemption, all investors must be verified accredited investors with a certain level of income, net worth, or “financial sophistication” as defined by the SEC. The verification process can be tedious, complex and time-consuming, however, VerifyInvestor.com offers a better and easier way to get through it. As a reliable third-party accredited investor verification service, VerifyInvestor.com discretely and directly handles all your investors’ sensitive financial information. You will benefit significantly from thorough reviews with fast turnaround times.

Be sure to follow VerifyInvestor.com and check the blog regularly for more announcements of events affecting the investment community.