Regulation Best Interest (Reg BI)
SEC rule requiring broker-dealers to act in a retail client's best interest.
What is Regulation Best Interest (Reg BI)?
Effective June 2020, Reg BI imposes disclosure, care, conflict-of-interest, and compliance obligations on broker-dealers making recommendations to retail customers. It raises the bar above old-style suitability without adopting the full fiduciary standard applied to advisers.
Regulation Best Interest (Reg BI): a worked example
Form CRS must be delivered so clients can see the relationship type, fees, and conflicts.
More terms in Regulation & Professional Duty
Fiduciary Duty
A legal obligation to act in the client's best interest.
Suitability Standard
A recommendation must be appropriate given the client's profile.
Registered Investment Adviser (RIA)
A firm registered to give advice for a fee, holding fiduciary duty.
Broker-Dealer
A firm that executes trades as agent (broker) or principal (dealer).
FINRA
The self-regulatory organization overseeing broker-dealers.
Securities and Exchange Commission (SEC)
The federal agency regulating securities markets.
SIPC
Insurance against broker failure - not against investment losses.
Securities Act of 1933
The 'truth in securities' law governing new issues.