Key Points
April 20 (Reuters) - The U.S. Securities and Exchange Commission (SEC) published a staff bulletin on Thursday giving guidance on how broker dealers and investment advisers must put their clients' interests ahead of their own when providing advice and recommendations to retail investors...
The guidance, which is the third in a series of such documents, specifically clarifies brokers' and advisers' so-called "care obligations" under the SEC's long-standing investment adviser fiduciary standard and its Regulation Best Interest rule (Reg BI), passed in 2019...
While staff guidance cannot be the basis for an SEC enforcement action, an increasing amount of the regulator's recent enforcement actions against advisers have focused on care obligations, so the information may be helpful, an SEC official told reporters in a background briefing...
The care obligations have three general categories: understanding the potential risks, rewards and costs associated with investments and strategies; understanding the retail investor who will be receiving the recommendations or advice; and based on that knowledge and a consideration of reasonably available alternatives, what investments or strategies are in the best interest of the investor...
