SEC Proposes Rules Addressing Broker-Dealer and Investment Adviser Standards of Conduct

April 19, 2018

On April 18, 2018, the U.S. Securities and Exchange Commission (SEC) voted 4-1 to propose a package of rules and interpretations (Proposals) intended to improve the retail investor experience and to provide greater clarity regarding investors’ relationships with broker-dealers and investment advisers. During the open meeting, SEC Chairman Jay Clayton addressed the “gap between reasonable investor expectations” surrounding the investment services they receive from broker-dealers and investment advisers and the “legal standards” regarding such services. Chairman Clayton further stated that it should be the SEC’s goal, in closing this gap, that there not be any limitation of investor choices and access to investment professionals. Chairman Clayton noted that the Proposals are intended to supplant the Department of Labor’s fiduciary rule, as well as similar state initiatives, and that the SEC consulted with these regulators as well as the Financial Industry Regulatory Authority (FINRA) in developing the Proposals.

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