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Sunday, April 18, 2021

Risk Alerts Regarding Reg BI For Broker-Dealers And Investment Advisers

Two Risk Alerts were released by The SEC’s Office of Compliance Inspections and Examinations (OCIE) for Reg BI and Form CRS on April 7, 2020. The Risk Alerts were issued to inform broker-dealers and investment advisers about the scope and content of initial examinations after the compliance date of June 30 for Reg BI and Form CRS.

The Director of OCIE, Peter Driscoll, added, “We understand that this implementation will be on iterative process, and our focus will be on firms continuing good faith and reasonable efforts, including taking into account firm-specific effects from disruptions caused by COVID-19”

On the next day, April 8, the Financial Industry Regulatory Authority (FINRA) in their Statement indicated that they will take the same approach described in the SEC Risk Alerts to examine broker-dealers and their associates for compliance with Reg BI, although their primary focus will be on assessment of whether or not firms have made a good faith effort to develop and implement procedures and policies “reasonably designated to comply with Reg BI and Form CRS”.

As always, FINRA will take action in case they find any indications of customer harm or violation of current standards.


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