In the article “SEC Takes Aggressive New Step In Enforcing Reg BI,” Financial Advisor shared webinar insights from business litigation partner David Porteous, who discussed what Securities and Exchange Commission (SEC) examiners are seeking from advisers regarding compliance with Regulation Best Interest (Reg BI).
According to the publication, broker-dealers have begun receiving requests from SEC examiners asking them to justify and explain their registered reps’ investment recommendations.
“What we are already seeing in these regulator requests is that they are typically focused on … sampling firms’ data and transactions,” said Porteous. He described how regulators are asking broker-dealers about particular products and customers for which there would be a greater need for documentation on transactions.
“Certainly, from a data-driven standpoint, we are seeing SEC requests that say, ‘We want all transactions from X date to Y date,’” Porteous noted. “Then, examiners will give you refined search criteria and further winnow down data to be able to say, ‘Okay, we’d like to see the information for XYZ customers to try to understand the basis of the documentation for these recommendations.’”