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FINRA Issues Regulation Best Interest/Form CRS Checklist

The Financial Industry Regulatory Authority has issued new resources to assist financial firms in their efforts to comply with the Securities and Exchange Commission’s Regulation Best Interest and Form CRS by the rules’ compliance date of June 30, 2020.

The Financial Industry Regulatory Authority has issued new resources to assist financial firms in their efforts to comply with the Securities and Exchange Commission’s Regulation Best Interest and Form CRS by the rules’ compliance date of June 30, 2020.

On June 5, 2019, the SEC adopted Reg BI which establishes a “best interest” standard of conduct for broker-dealers and associated persons when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities, including recommendations of types of accounts. The SEC also adopted a new rule to require broker-dealers and investment advisers to provide a brief relationship summary, Form CRS, to retail investors.

FINRA’s Reg BI and Form CRS checklist outlines the major requirements of the rules and notes key differences between FINRA rules and SEC’s Reg BI and Form CRS.

In addition, on December 18, 2019, FINRA is hosting a Reg BI Conference in Washington, D.C. The one-day event is free of charge to the first two attendees per firm and is designed to help regulators, executives and industry practitioners learn more about the regulation. A recording will be available on FINRA’s website following the event.

As with other SEC rules, FINRA will enforce compliance with Reg BI and adhere to SEC guidance and interpretations. FINRA said that it expects to work with the SEC “to ensure consistency in examining broker-dealers and their associated persons for compliance with Reg BI and Form CRS.”

FINRA is a not-for-profit organization that regulates brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees.

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