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14 April 2021 Comment Letter

Regulation Best Interest 2.0: A Short Manifesto for Improving Investor Protection

  1. Kurt Schacht, JD, CFA
  2. Karina Karakulova

CFA Institute recommendations to SEC regarding desired changes and adjustments needed to Regulation Best Interest (“Reg. BI”).

Regulation Best Interest has fallen far short of the vision and expectations initially intended in the pursuit to mitigate mis-selling of financial products and services that has existed for many years and was magnified by the Great Financial Crisis. It has failed to deliver on the promise of bringing clarity and consistency to the standard of conduct of broker-dealer firms and their registered representatives when providing advice to retail investors. So too has Reg. BI failed to meet the Congressional mandate under the Dodd-Frank Act. It was a financial crisis of different origins and nuances than our current predicament that gave rise to the regulatory effort to address mis-selling of financial products and services. Yet here we are more than a decade later having done little more than produce new labels for the same level of brokerage services and responsibilities.
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