States Sue SEC To Stop Reg Best Interest
September 17, 2019 by Cassie Miller
Seven states and the District of Columbia are suing the Securities and Exchange Commission, saying it failed to protect consumers in its Regulation Best Interest rule.
The suit, filed in the Southern District of New York Monday, includes New York, California, Oregon, Connecticut, Delaware, Maine and New Mexico.
The 36-page complaint alleges that the final rule, “undermines critical consumer protections for retail investors, increases confusion about the standards of conduct that apply when investors receive recommendations and advice from broker-dealers or investment advisers, makes it easier for brokers to market themselves as trusted advisers (while nonetheless permitting them to engage in harmful conflicts of interest that siphon investors’ hard-earned savings), and contradicts Congress’s express direction.”
The plaintiffs assert that the Commission has failed to act on a 2010 Dodd-Frank directive that required the SEC to write rules establishing a fiduciary standard for broker-dealers to replace the suitability standard.
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