In Short
The Situation: The U.S. Securities and Exchange
Commission ("SEC") has adopted: (i) new regulations
relating to the relationship between broker-dealers and their
retail customers; and (ii) interpretations of the standard of
conduct between investment advisers and their clients and of the
broker-dealer exclusion from the definition of investment
adviser.
The Result: When the new regulations are
implemented, broker-dealers will have a heightened duty toward
their retail customers, intended to more closely match the duties
owed by investment advisers to their clients, and will have new
disclosure obligations as well.
Looking Ahead: Broker-dealers serving retail
customers should review their business practices in light of the
adoption of the new regulations and disclosure requirements and
take steps to ensure they satisfy the new standards for disclosure,
care, conflict of interest, and compliance obligations.
