SEC adopts rules and interpretive guidance designed to enhance and clarify the obligations of financial professionals

Abstract

Purpose

This article provides an overview of the US Securities and Exchange Commission’s (SEC) recent approval of a package of rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers.

Design/Methodology/Approach

The article provides legal analysis for and historical context of the requirements of the SEC’s adopted rules, Regulation Best Interest and Form CRS in addition to the two separate interpretations under the Investment Advisers Act of 1940, the Standard of Conduct for Investment Advisers; and the Broker-Dealer Exclusion from the Definition of Investment Adviser.

Findings

The SEC’s adopted regulatory package does not adopt a uniform fiduciary standard for broker-dealers and investment advisers but instead promulgates legal requirements and mandated disclosures in order to conform to the SEC’s perceived expectations for reasonable investors.

Practical implications

Investment advisers and broker-dealers should consult with their legal counsel in assessing how and to what extent the new regulatory package is applicable to them.

Originality/Value

This article provides practical guidance from lawyers who have extensive experience with the Investment Company Act, Investment Advisers Act, and the Securities Acts.

Citation

Rosella, M.R., Avdeychik, V. and Capozzi, J.R. (2019), "SEC adopts rules and interpretive guidance designed to enhance and clarify the obligations of financial professionals", Journal of Investment Compliance, Vol. 20 No. 4, pp. 35-44. https://doi.org/10.1108/JOIC-08-2019-0049