In “These Compliance Issues Are Top of Mind for Regulators. Are You Ready?” ThinkAdvisor summarized insights from business litigation partner Sandra Grannum and Securities and Exchange Commission (SEC) and regulatory enforcement defense partner Jim Lundy during a Faegre Drinker webinar on Regulation Best Interest (Reg BI), as well as FINRA and SEC examinations and guidance.
In 2022, the priority for the Financial Industry Regulatory Authority (FINRA) in examining broker dealers’ (BDs’) compliance with Reg BI “is to make sure that written supervisory provisions are, in fact, in place and to foster compliance with the rules,” Grannum said. FINRA also wants to see that BDs “are actually training individuals to make sure that they are capable of complying with the rules and that there are adequate disclosures to the public on what it is they’re doing.”
Lundy noted that while Reg BI applies to broker-dealers, the SEC, under Chair Gary Gensler, “is continuing to scrutinize” the investment advisory industry, including “more examinations with alleged violations of Section 206 — the statute that applies the fiduciary standard.” He added that best interest is “definitely much more aligned than it was historically” and discussed the SEC’s guidance. Lundy further addressed what advisers and BDs should expect from the examination program.