Home News SEC Opens Comment Period for Broker Advice Rules

SEC Opens Comment Period for Broker Advice Rules

The Securities and Exchange Commission published its 1000-page investment advice proposal in the Federal Register and will close the comment period on August 7, 2018.

The Securities and Exchange Commission published its 1000-page investment advice proposal in the Federal Register and will close the comment period on August 7, 2018.

The Securities and Exchange Commission voted 4-1 last month to seek public comment on its proposed best interest rule for brokers, a new broker-client relationship disclosure form, and whether to restrict the use of the adviser/advisor title. Additionally, the regulators are seeking comment on their proposed interpretation of the fiduciary obligations of investment advisers.

Under the SEC’s proposal, a broker-dealer would be required to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy.

The SEC proposed to address investor confusion about the nature of their relationships with investment professionals through a standardized, short-form (4-page maximum) disclosure document. The form would provide retail investors with information about the nature of their relationship with their investment professional and would supplement other more detailed disclosures.

The SEC also proposed to restrict certain broker-dealers and their financial professionals from using the terms “adviser” or “advisor” as part of their name or title with retail investors.

If the SEC’s rulemaking package is enacted, it could replace the Department of Labor’s fiduciary rule, which is currently under review as directed by President Trump and was vacated by the Fifth Circuit Court of Appeals in mid-April.

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