Top RIA Compliance News Articles for the Week of July 27, 2018

1. 3 Ways SEC Reg BI Could Confuse Investors: Reish (Author- Melanie Waddell, ThinkAdvisor)

As reported by Melanie Waddell, “The Securities and Exchange Commission’s proposed Regulation Best Interest, or Reg BI, for brokers differs from the best-interest standard for advisors in three ‘significant’ ways, which could lead to investor confusion, says prominent ERISA attorney Fred Reish.” According to Reish, the three differences are: “Reg BI for broker-dealers applies only to recommendations of securities transactions or investment strategies involving securities transactions, Reg BI for broker-dealers only applies to recommendations to ‘retail customers,’ and Reg BI for broker-dealers would only apply at the time the recommendation is made.” To read more details around each of the three “meaningful differences” click here.

2. Interesting Angles on the DOL’s Fiduciary Rule #99 (Author- Fred Reish, FredReish.com)

In his 99th article discussing the DOL fiduciary rule and the SEC’s “best interest” proposals, Reish discusses some the duties under the RIA Interpretation and “compares them to the DOL’s vacated fiduciary rule and the SEC’s proposed Regulation Best Interest (Reg BI) for broker-dealers.” In particular, Reish highlights that all investment advisers should the review the SEC staff’s interpretation of the fiduciary obligations of an RIA.

3. Cryptocurrency deals receive increased scrutiny by SEC (Author- Bloomberg news, Investment News)

According to a recent article in InvestmentNews, “Wall Street’s main regulator is boosting its scrutiny of brokerages that deal in cryptocurrencies, according to two people familiar with the matter, the latest sign that authorities want to know more about a burgeoning market that they fear might be full of misconduct.” Over the past year, cryptocurrencies have received increased attention from regulators. Bloomberg News has reported “that Justice Department lawyers have opened a criminal probe into whether traders are manipulating the price of bitcoin and other digital currencies.”

4. Kitces On Why The SEC’s Best Interest Proposal Violates The ’40 Act (Author- Tracey Longo, Financial Advisor Magazine)

As reported by Tracey Longo, Michael Kitces, argued in a comment letter that “the Securities and Exchange Commission’s best-interest violates the Investment Adviser’s Act of 1940 and more recent court rulings.” According to the article, Kitces argued “the ’40 Act provides only a very specific and narrow scope for broker-dealers to avoid offerings that may be construed as “advice” that would trigger a requirement to register as an investment advisor and a fiduciary.” To read more on Kitces’ comment letter, click here.

5. Regulation BI is BS (Author – Dan Moisand, FinancialPlanning.com)

According to Dan Moisand, “Instead of Regulation Best Interest, the new SEC proposal to replace the toppled Labor Department rule should be called Regulation BS.” According to Moisand, “the regulator is proposing a new ‘Customer Relationship Summary’ to alleviate investor confusion — which, as a concept, isn’t a bad idea. Sadly, the Commission’s draft fails miserably as a consumer protection measure for the public and actually makes matters worse.” To read more on how Moisland believes the SEC’s approach is flawed, click here.

Don’t forget to check out last week’s top RIA compliance news articles on cybersecurity, the SEC advice rule, and the importance of vetting technology vendors. Be sure to check back next Friday for next week’s top articles!