As this issue of Investment Advisor hits your inbox or mail- box, the compliance date for theSecurities and Exchange Commission’sRegulation Best Interest and Form CRShave officially kicked in.
That is, if the U.S. Court of Appealsfor the 2nd Circuit indeed ruled in favorof the SEC and upheld Reg BI in the casebrought against the rule by XY PlanningNetwork, seven states and the Districtof Columbia.
SEC Chairman Jay Clayton signaledthat he was confident the SEC wouldprevail by issuing a statement in mid-June confirming the June 30 compliance date. He warned advisors andbroker-dealers that they must take special care when recommending 401(k)/IRA rollovers and withdrawals, complexor risky products as well as coronavirus-related investments and SPACs, or special purpose acquisition corporations.
The application of Reg BI to recom-
mendations of rollovers and withdraw-
als from retirement accounts is one of
the rule’s “most significant enhance-
ments over the status quo,” Clayton said,
and these recommendations “should be
approached with care.”
Broker-dealers and advisors should
be “particularly attuned” to their regula-
tory obligations in light of the additional
flexibility Congress recently provided
investors to take withdrawals from cer-
The Coronavirus Aid, Relief and
Economic Security (CARES) Act allows
eligible participants in certain tax-
advantaged retirement plans to take
early distributions of up to $100,000
during this calendar year without being
subject to early withdrawal penalties
and with an expanded window for pay-
ing the income tax they owe on the
amounts they withdraw, he explained.
“By waiving early withdrawal penalties and other limitations tied to retirement accounts, Congress providedinvestors with substantial flexibility toaccess these plans in order to weatherfinancial hardships related to the pandemic,” Clayton said.
HISTORY OF THIS COLUMN
As you know, The Playing Field has rightly followed the fiduciary debate as it hasunfolded. It goes without saying that theongoing “fiduciary” debate sits at the coreof how advisors and broker-dealers cannavigate the investment services field.
I actually started The Playing Fieldway back in 2002, when I was New YorkBureau Chief for Investment AdvisorMagazine — a position I held for twoyears before returning to my Washingtonjournalism roots. Back then, there wasno digital presence — only IA. My theneditors sat me down and said somethingalong the lines of: “Think up a columntopic.” So I did.
The concept of The Playing Field wasto not only examine how the advisoryand brokerage industries were competing with one another, but to also look athow the players — in and around theseindustries — were shaping the rules thatdictated how they could navigate.
Which players am I referring to? Well,there’s a plethora — presidents, lawmakers, SEC chairs, lobbying groups, industry officials, lawyers, cabinet agencyheads (such as the Department of Labor,for instance).
Getting back to the current issue athand, the run-up to the June 30 effective date for the SEC’s Reg BI has been
THE PLAYING FIELD
By Melanie Waddell
Reg BI and History of ‘Fiduciary’ Debate
The standards of conduct are core to how advisors and BDs do business.
The application of RegBI to recommendationsof rollovers andwithdrawals fromretirement accountsis one of the rule’s“most significantenhancements overthe status quo,”SEC Chairman JayClayton said, and theserecommendations“should be approachedwith care.”