New SEC Enforcement Chief to Bring Wider Net to the Reg BI Rule

Recently a new, uniform, fiduciary standard has been proposed by Gurbir S. Grewal; 6 weeks into his appointment as the SEC’s new Director of Enforcement.

Prior to joining the commission, Mr. Grewal had served as NJ’s attorney general from January 2018 up until recently, and has proposed a uniform fiduciary standard for brokers and advisors locally, making New Jersey the first state to adopt it.

The existing Reg BI rule is not yet a fiduciary standard, but SEC enforcers still refer to it when investigating potential violations in regards to fiduciary activities and relations between clients and advisors.

SEC Chair Gary Gensler and other commission members have high hopes for Gurbir Grewal’s tenure. Gensler said, “He has had a distinguished career as New Jersey’s chief law enforcement officer and as a prosecutor at both the local and federal levels. He has the ideal combination of experience, values, and leadership ability to helm the Enforcement Division at this critical time.”

James Lundy, a partner with Faegre Drinker and a member of the firm’s Best Interest Compliance Team is sure that a leader with such a background will interpret Reg BI expansively, which will inevitably bring Reg BI closer to convergence with the fiduciary standard for investment advisors.

In his 10-minute video message posted on July 16, 2021, Mr. Grewal is saying “Justice is simply not about numbers of arrests or convictions. Justice is also about the cases we don’t make, the individuals we keep out of the criminal justice system.”

Although the pandemic might have a negative impact on the movement of suсh rules, there’s no doubt that the rule will see the light eventually.

At RiXtrema we care about due diligence process and keep a close eye on new SEC updates. Request a demo for our best compliance solution RegBI Optimizer, to always be prepared.


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