Chicago partner Jim Lundy was quoted in an Ignites article titled “'This Is Not a Win:' Firms and Investor Groups React to SEC Advice Rules” regarding the SEC’s vote on Regulation Best Interest and the June 30, 2020 compliance date. In a 3-to-1 vote on June 5, the SEC voted to establish enhanced standards of conduct for brokers, as part of a four-part regulatory package.
Jim said that brokerage firms don’t feel like they are walking away with a “win.” “The changes are going to be material, and brokerages are going to have to take them seriously and adjust their business practices accordingly,” he said. The article noted that form CRS likely presents the biggest challenge. While the SEC expressed willingness to let broker-dealers be “creative” in their presentations, the documents will likely evolve to contain “a lot of legalese, hedging and overt risk disclosures,” said Jim. He added, “In several years, the Form CRS may be used by the SEC’s enforcement division as an additional basis to charge firms who didn’t disclose what they were supposed to.”
Read “'This Is Not a Win:' Firms and Investor Groups React to SEC Advice Rules.” (Subscription Required)