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ARTICLE · 28 SEPTEMBER 2020

Additional Guidance On Regulation Best Interest

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Regulation Best Interest ("Reg BI") requires broker-dealers and their associated persons who are natural persons to act in the best interest of their retail customers when making a recommendation.

United StatesFinance and Banking
Bradley Berman
Bradley Berman
Gonzalo Go
Gonzalo Go
Marla Matusic
Marla Matusic
Anna T. Pinedo
Anna T. Pinedo
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Regulation Best Interest ("Reg BI") requires broker-dealers and their associated persons who are natural persons to act in the best interest of their retail customers when making a recommendation. On August 4, 2020, the SEC's Division of Trading and Markets staff ("Staff") provided additional guidance in complying with Reg BI,1 particularly with respect to the definition of "retail customer," the disclosure obligation as it relates to the use of the term "advisor" or "adviser" and the care obligation.

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  • A regulated financial services industry professional, acting in a personal capacity for her or his own account, who receives from a broker-dealer a recommendation of a securities transaction or investment strategy involving securities is considered a "retail customer" for purposes of Reg BI. Although the recipient of such recommendation is a regulated financial services industry professional, it would not excuse a firm from complying with Reg BI

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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