The North American Securities Administrators Association (the "NASAA") asked the SEC to clarify the scope of the proposed Regulation Best Interest.
In a comment letter to the SEC, the NASAA made several recommendations to the SEC to align its proposed regulation on broker-dealer conduct with the best interests and reasonable expectations of investors. The NASAA recommended that the SEC:
- designate the new regulation as "Broker-Dealer Standard of Conduct" rather than "Regulation Best Interest";
- expand the new broker-dealer standard to include all investors and securities products;
- add specific requirements and broaden the broker-dealer conflict of interest mitigation and disclosure obligations under the new broker-dealer standard;
- bar certain practices, particularly those regarding financial incentives, for broker-dealers and their associated persons;
- initiate more "definite borderlines between investment advisory and broker-dealer activities" through rulemaking guidance;
- mandate that broker-dealers and their associated persons consider external securities products when making recommendations;
- clarify the "rights and remedies" that the SEC anticipates investors will have through rulemaking guidance;
- control the scope of "impermissible broker-dealer titles beyond just 'adviser' or 'advisor'";
- test proposed Form CRS to assess its usefulness to investors; and
- delegate responsibility to state securities regulators with respect to the registration of investment adviser representatives.
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