On August 3, 2022, the U.S. Securities and Exchange Commission (SEC) published a Staff Bulletin providing guidance regarding conflicts of interest under broker-dealer Regulation Best Interest (Reg BI) and investment adviser fiduciary duty standards.1 The Bulletin, entitled “Standards of Conduct for Broker-Dealers and Investment Adviser Conflicts of Interest,” signals the Staff’s continued focus on conduct standards and expansive interpretation of these standards.2 The Bulletin also reminds firms of their obligation — often beyond disclosure — to address conflicts and to have rigorous and dynamic policies in place to identify and address conflicts.
After an introductory background section summarizing conflict-of-interest rules under Reg BI3 and investment advisers’ fiduciary duty,4 the Bulletin takes the form of answers and guidance in response to 13 questions posed by a hypothetical firm. These questions and answers are grouped around concepts discussed in previous Reg BI guidance: identifying conflicts of interest, eliminating conflicts of interest, mitigating conflicts of interest, limited product menus, and disclosing conflicts of interest.5 A few themes running through the Bulletin are discussed below.
Sidley Austin LLP provides this information as a service to clients and other friends for educational purposes only. It should not be construed or relied on as legal advice or to create a lawyer-client relationship. Readers should not act upon this information without seeking advice from professional advisers.
Attorney Advertising—Sidley Austin LLP, One South Dearborn, Chicago, IL 60603. +1 312 853 7000. Sidley and Sidley Austin refer to Sidley Austin LLP and affiliated partnerships, as explained at www.sidley.com/disclaimer.
© Sidley Austin LLP