The SEC’s new standard of conduct rules – application to retirement accounts

In completing its broker-dealer standard of conduct rulemaking, the SEC addressed important questions about the applicability of those requirements to retirement accounts. This alert provides analysis of the reach of the new requirements in the retirement market, including:

  • the types of broker-dealer interaction with plan participants that fall within the reach of Regulation Best Interest and Form CRS
  • how the new rules deal with the treatment of rollover advice to plan participants and IRA owners
  • practical considerations regarding the distinction between “investment education” and “recommendations”

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Preemption of state securities laws

With the recent announcement by the US Securities and Exchange Commission (SEC) that it will hold an open meeting on June 5, 2019, to consider adopting Regulation Best Interest, one of the major issues that the SEC may clarify is its view of whether Regulation Best Interest preempts state securities regulations that impose a fiduciary duty on broker-dealers.

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DC Circuit finds negligent, but not willful fraud for inadequate disclosures

In a much-anticipated decision, on April 30, 2019, the US Court of Appeals for the District of Columbia Circuit issued its decision in Robare, a case that concerned an investment adviser’s (IA) disclosure of conflicts of interest regarding its receipt of payments from a custodian. The court held that the Commission’s findings of “negligent” violations under Section 206(2) were supported, but the Commission’s findings of “willful” violations under Section 207, based on the same negligent conduct, “are erroneous as a matter of law.”

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OCIE Lists Privacy Blunders; SEC Explains When Digital Assets become Securities; Ohio Mandates IARs and RR to Report Elder Abuse; FINRA Gives Broker an “F” in Email Review; and Google Searches Don’t Count as Due Diligence

Regulatory Updates from Jaqueline Hummel at Hardin Compliance Consulting LLC.

Topics include:

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