SEC Regulation Best Interest: Charting A Course For Securities And Annuity Sales

In June, we circulated our fifth article on the continuing saga regarding the standard of conduct for sales of securities and annuities — and the efforts of federal and state regulators to impose new conditions on the existing standards. Our earlier articles focused on the potential for regulatory and litigation issues arising under the Department of Labor's fiduciary rule adopted in 2016, which was struck down by the Fifth Circuit Court of Appeals. Soon after the court's opinion, the SEC proposed a new regulation governing the regulation of broker-dealers in the recommendation and sale of securities — the Regulation Best Interest — which was the subject of our article last month. From the outset, we predicted that the change in regulatory treatment may create potentially significant changes in litigation involving sales of both securities and annuities. We predicted the following results for the DOL's fiduciary rule before it was vacated.