SEC Issues New Warning Regarding Reg BI Compliance Lapses

Posted on February 10th, 2023 at 1:54 PM
SEC Issues New Warning Regarding Reg BI Compliance Lapses

From the Desk of Jim Eccleston at Eccleston Law.

The Securities and Exchange Commission (SEC) has issued a warning indicating that financial advisory firms are relying on outdated systems to achieve compliance with Regulation Best Interest (Reg BI).

The SEC’s risk alert outlines several compliance problems that the SEC discovered during targeted exams, some of which have resulted in violations relating to rollover and account recommendations. The SEC’s risk alert indicates that the agency’s exam division aims to incorporate compliance with Reg BI “into retail-focused examinations of broker-dealers, particularly those that include sales practices within the scope of the examination.” The risk alert emphasizes the compliance deficiencies discovered during exams as well as instances of faulty practices that could potentially lead to deficiencies.

The SEC additionally noted that financial advisory firms depend “heavily on surveillance systems that existed before the effective date” of Reg BI “without considering whether those systems needed modification.” The SEC also discovered a host of conflict of interest problems, such as several financial advisory firms failing to employ written policies or protocols for identifying and addressing conflicts.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: eccleston, eccleston law, advisors, law, sec

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