Reg BI and Form CRS Risk Alerts
April 7th | 2020
Late last week, SEC Charmain Jay Clayton announced the agency will not be delaying the June, 30, 2020 go-live date of Regulation Best Interest and Form CRS, which are two pieces of a broader package of rules and interpretations intended to enhance the quality and transparency of retail investors’ relationships with broker-dealers and investment advisers.
Today, the SEC’s Office of Compliance Inspections and Examinations (OCIE) has issued two risk alerts that provide broker-dealers and investment advisers with advance information about the expected scope and content of the initial examinations for compliance with Regulation Best Interest and Form CRS.
Initial examinations of Regulation Best Interest will focus on assessing whether broker-dealers have made a good faith effort to implement policies and procedures reasonably designed to comply with Regulation Best Interest, including the operational effectiveness of broker-dealers’ policies and procedures.
Initial examinations of Form CRS will focus on assessing whether firms have made a good faith effort to implement Form CRS, including reviewing the filing and posting of a firm’s relationship summary as well as its process for delivering the relationship summary to existing and new retail investors.
Note that these risk alerts are not intended to be explanations of the rules. For that, the SEC encourages reviewing, among other things: the Regulation Best Interest Adopting Release, Reg. BI Small Entity Compliance Guide, Form CRS Adopting Release, and the Form CRS Small Entity Compliance Guide.