SEC Proposed Rule on Best Interest Standard

The SEC has issued a proposed regulation establishing a standard of conduct for broker-dealers and those associated with broker-dealers when making recommendations of securities transactions or investment strategies involving securities to retail customers.

Document Excerpt

This obligation shall be satisfied if: the broker-dealer or a natural person who is an associated person of a broker-dealer, before or at the time of such recommendation reasonably discloses to the retail customer, in writing, the material facts relating to the scope and terms of the relationship, and all material conflicts of interest associated with the recommendation; the broker-dealer or a natural person who is an associated person of a broker-dealer, in making the recommendation, exercises reasonable diligence, care, skill, and prudence; the broker-dealer establishes, maintains, and enforces written policies and procedures reasonably designed to identify and at a minimum disclose, or eliminate, all material conflicts of interest that are associated with such recommendations; and the broker-dealer establishes,

Link

https://www.sec.gov/rules/proposed/2018/34-83062.pdf

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