{"id":7178,"date":"2020-10-05T14:43:38","date_gmt":"2020-10-05T19:43:38","guid":{"rendered":"https:\/\/rixtrema.com\/blog\/?p=7178"},"modified":"2020-10-05T15:30:24","modified_gmt":"2020-10-05T20:30:24","slug":"reg-bi-compliance","status":"publish","type":"post","link":"https:\/\/rixtrema.com\/blog\/reg-bi-compliance\/","title":{"rendered":"What&#8217;s happening in Reg-BI Compliance Court?"},"content":{"rendered":"\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<ol class=\"wp-block-list\"><li><strong><a href=\"#love\">I love to hear from readers.<\/a><\/strong><\/li><li><strong><a href=\"#Short\">The Short Story to Reg-BI Court Developments<\/a><\/strong><\/li><li><strong><a href=\"#Take\">Take note of Massachusetts.<\/a><\/strong><\/li><li><strong><a href=\"#What\">What is happening in your state?&nbsp;<\/a><\/strong><ul><li><strong><a href=\"#Jersey\">New Jersey and Nevada<\/a><\/strong><\/li><\/ul><\/li><li><strong><a href=\"#Remember\">Remember what the SEC wants.<\/a><\/strong><\/li><li><strong><a href=\"#prepared\">Be prepared for more regulation.<\/a><\/strong><\/li><li><strong><a href=\"#Optimizer\">Reg-BI Optimizer prepares you for any outcome.<\/a><\/strong><\/li><\/ol>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Several prudent financial analysts and broker-dealers contacted me for Reg-BI updates. Specifically, they wonder if any court cases are affecting the interpretation of the SEC\u2019s new regulation. While new court cases are slow to appear, the story is much bigger and more detailed than I thought<a id=\"love\"><\/a>.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h2 style=\"text-align: justify;\"><b>I love to hear from readers<\/b><\/h2>\n<p>\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">First, I want to be clear that I welcome any questions or comments about my articles. If you have any topic ideas or research areas, write to me in the comment box below<a id=\"Short\"><\/a>.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h2 style=\"text-align: justify;\"><b>The Short Story to Reg-BI Court Developments<\/b><\/h2>\n<p>\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">With a Republican administration believing in small Federal government, I think it is safe to say that the SEC may defer to States to oversee and enforce Reg-BI\u2019s new standards. With thousands of affected people in the financial services industry, this may make logistical sense. It means that RIA and BDs may experience different levels of scrutiny, depending on where they work<a id=\"Take\"><\/a>.\u00a0\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h2 style=\"text-align: justify;\"><b>Take note of Massachusetts<\/b><\/h2>\n<p>\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Massachusetts began <\/span><a href=\"https:\/\/www.investmentnews.com\/massachusetts-enforcing-fiduciary-rule-196637\"><span style=\"font-weight: 400;\">enforcing a new regulation<\/span><\/a><span style=\"font-weight: 400;\"> at the end of August that would \u201craise the investment advice standard for brokers.\u201d They are the first state to implement such a rule, but it will most likely not last. The bill has since been modified and not adopted yet, but I am sure it is on someone\u2019s docket.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Massachusetts has a formidable reputation for enforcing securities laws and may go even further. William Galvin, the state\u2019s Secretary of the Commonwealth, ordered more than $56 million in fines between <\/span><a href=\"https:\/\/www.investmentnews.com\/how-william-galvin-has-galvanized-the-broker-dealer-industry-54555\"><span style=\"font-weight: 400;\">2012-2013<\/span><\/a><span style=\"font-weight: 400;\">. Keep in mind that he can only impose penalties in Massachusettes. Finra, alone, fined its National BD members <\/span><a href=\"https:\/\/www.investmentnews.com\/how-william-galvin-has-galvanized-the-broker-dealer-industry-54555\"><span style=\"font-weight: 400;\">$78.2 million in that same period<\/span><\/a><span style=\"font-weight: 400;\">. For context, FINRA had a staff of 3,000 at that time while Galvin had just 26.<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">I don\u2019t want to get into the weeds on Massachusetts state regulatory policy or any other state for that matter. William Galvin may be the Batman of regulating the Financial Services industry, but readers in the other 49 states can breathe a sigh of relief that they\u2019re not in Massachusetts<a id=\"What\"><\/a>.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h2 style=\"text-align: justify;\"><b>What is happening in your state?<a id=\"Jersey\"><\/a>\u00a0<\/b><\/h2>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h3 style=\"text-align: justify;\"><b>New Jersey and Nevada<\/b><\/h3>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/www.investmentnews.com\/new-jersey-fiduciary-rule-pressure-leads-to-public-hearing-comment-deadline-extension-80005\"><span style=\"font-weight: 400;\">New Jersey and Nevada<\/span><\/a><span style=\"font-weight: 400;\"> are two other states seeking to impose investment advice standards even after Reg-BI\u2019s implementation date. COVID-19 delayed New Jersey\u2019s advice standard, but that does not mean that it will stay dead<a id=\"Remember\"><\/a>.\u00a0<\/span><\/p>\n<p>Nonetheless, Advisors in every state need to keep tabs on developing regulation. As I become aware of them, you can rest assured that they will appear on this blog.\u00a0\u00a0<\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h2 style=\"text-align: justify;\"><b>Remember what the SEC wants<\/b><\/h2>\n<p>\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">First, Reg-BI exams will determine whether a BD or RIA has made a \u201c<\/span><a href=\"https:\/\/www.thinkadvisor.com\/2020\/04\/07\/sec-releases-exam-schedules-for-reg-bi-form-crs\/?kw=SEC%20Releases%20Exam%20Schedules%20for%20Reg%20BI%2C%20Form%20CRS&amp;utm_source=email&amp;utm_medium=enl&amp;utm_campaign=breakingnewsalert&amp;utm_content=20200407&amp;utm_term=tadv\"><span style=\"font-weight: 400;\">good-faith effort<\/span><\/a><span style=\"font-weight: 400;\"> to implement policies and procedures designed to comply with Reg-BI and be effective.\u201d As of June 30th, 2020, the SEC wants documentation and proof that each recommendation an RIA or BD makes is within its \u201cBest Interest\u201d guidelines.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">Read more about what a<\/span><a href=\"https:\/\/rixtrema.com\/blog\/what-is-best-interest-anyway\/\"><span style=\"font-weight: 400;\"> \u201cBest Interest\u201d <\/span><span style=\"font-weight: 400;\">recommendation is on our blog<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The Commission will look for the same in their assessment of Form CRS filings. They will \u201creview the filing and posting of the firm\u2019s relationship summary as well as its process for delivering the CRS Form to existing and new retail investors.\u201d The Office of Compliance Inspections and Examinations (OCIE) will most likely review filings that occur during the first year after the compliance date. COVID has likely pushed back that evaluation expectation.<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">As their<\/span><a href=\"https:\/\/www.sec.gov\/files\/Risk%20Alert-%20Regulation%20Best%20Interest%20Exams.pdf\"><span style=\"font-weight: 400;\"> April Announcement outlined<\/span><\/a><span style=\"font-weight: 400;\">, the OCIE will be evaluating each RIA and Broker-Dealer to the standards unique to their firm. Not every document listed in the announcement will apply to every firm<a id=\"prepared\"><\/a>.\u00a0\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h2 style=\"text-align: justify;\"><b>Be prepared for more regulation.<\/b><\/h2>\n<p>\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">We can expect that many of these state-specific regulations may conflict with the federal government, but whether both are in effect will depend upon the SEC\u2019s management style.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">The Biden campaign already made it clear that they are not fans of Reg-BI and would likely impose a more strict rule &#8211; like the Obama Administration\u2019s DOL Fiduciary Rule.<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/rixtrema.com\/blog\/what-is-regbis-future-with-a-democrat-administration\/\"><span style=\"font-weight: 400;\">Click HERE <\/span><\/a><span style=\"font-weight: 400;\">to read about Reg-BI\u2019s future with a Democrat Administration<a id=\"Optimizer\"><\/a>.<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<h2 style=\"text-align: justify;\"><b>Reg-BI Optimizer prepares you for any outcome<\/b><\/h2>\n<p>\u00a0<\/p>\n<p style=\"text-align: justify;\"><span style=\"font-weight: 400;\">RiXtrema built their Reg-BI Optimizer on a backbone of understanding Regulation Best Interest and the DOL\u2019s Fiduciary Rule. With Reg-BI Optimizer in your firm, you can rest easy knowing that you are ready for any regulatory outcome. A top ERISA Law Firm (Groome Law Group) reviewed and approved that the software meets the SEC\u2019s expectations.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<p style=\"text-align: justify;\"><b>Click the banner below <\/b><span style=\"font-weight: 400;\">to request a quick demonstration of Reg-BI Optimizer. See how it can easily elevate your firm to compliance or write to our Client Success Team with any questions at <\/span><a href=\"mailto:clientsuccess@rixtrema.com\"><span style=\"font-weight: 400;\">clientsuccess@rixtrema.com<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0\u00a0\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><a href=\"https:\/\/rixtrema.com\/blog\/category\/regulation-best-interest\/\"><span style=\"font-weight: 400;\">Read More about Reg-BI on our blog<\/span><\/a><\/p>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<figure class=\"wp-block-image size-large\"><a href=\"https:\/\/rixtrema.net\/regbioptimizer\/index?source=Colin-10-05-2020\" target=\"_blank\" rel=\"noopener noreferrer\"><img loading=\"lazy\" decoding=\"async\" width=\"542\" height=\"100\" src=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1.png\" alt=\"regulation best interest software\" class=\"wp-image-6468\" srcset=\"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1.png 542w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1-300x55.png 300w, https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/05\/REGBIOPTIMIZER1-500x92.png 500w\" sizes=\"auto, (max-width: 542px) 100vw, 542px\" \/><\/a><\/figure>\n\n\n\n<div style=\"height:50px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n","protected":false},"excerpt":{"rendered":"<p>With a Republican administration believing in small Federal government, I think it is safe to say that the SEC may defer to States to oversee and enforce Reg-BI\u2019s new standards. With thousands of affected people in the financial services industry, this may make logistical sense. It means that RIA and BDs may experience different levels of scrutiny, depending on where they work.  <\/p>\n","protected":false},"author":9,"featured_media":7179,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[300],"tags":[1282,277,198,182],"class_list":["post-7178","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-regulation-best-interest","tag-reg-bi-optimizer","tag-regulation-best-interest","tag-sec","tag-sec-rule"],"jetpack_featured_media_url":"https:\/\/rixtrema.com\/blog\/wp-content\/uploads\/2020\/10\/Reg-BI-Compliance-Court-min.png","yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v15.9.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What&#039;s happening in Reg-BI Compliance Court?<\/title>\n<meta name=\"description\" content=\"With a Republican administration believing in small Federal government, I think it is safe to say that the SEC may defer to States to oversee and enforce Reg-BI\u2019s new standards. 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