Require broker-dealers and investment advisers to provide a relationship summary (limited to a maximum of four pages) to investors that captures certain information, as discussed in greater detail below, through the use of newly proposed Form CRS, and place restrictions on the use of certain names and titles, such as “adviser” and “advisor,” for firms and financial professionals The Proposed Rules, generally, take the following steps, as described in greater detail below:
#FIDUCIARY STANDARD ACCOUNTS PROFESSIONAL#
In addition, the web of regulation relating to professional standards of care extends beyond the U.S. With respect to the latter, Chairman Clayton suggested that confusion and compliance costs associated with certain federal and state standard of care requirements have created unintended consequences, such as disrupting or limiting the availability of transaction-based or pay-as-you-go retail investment models. In the open meeting introducing the proposals, SEC Chairman Jay Clayton highlighted that the goals of the Proposed Rules include better aligning regulations and obligations of broker-dealers and investment advisers with the expectations of retail investors, and preserving retail investor choice. The Proposed Rules, which are further described below, follow recent developments in respect of the Department of Labor’s “Fiduciary Rule,” which expanded the applicability of “fiduciary” status (and corresponding duties) to various financial service providers under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and effectively imposed similar “fiduciary” status to comparable financial service providers to retail customers, including with respect to Individual Retirement Accounts (IRAs). The comment period for each proposal will be 90 days from each respective proposal’s publication in the Federal Register. Three proposals have been published for comment, designed to be interlocked and complementary. Securities and Exchange Commission (“SEC”) took the long-awaited step of proposing rules, interpretations and guidance (the “Proposed Rules”) that would seek to enhance and clarify the standards of care applicable to broker-dealers and to investment advisers when dealing with retail clients through standardized and additional disclosure, and through newly promulgated or clarified standards of care for broker-dealers and investment advisers.
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