SEC Signals Enforcement Ramp-Up Coming for Conflicted Brokers

Stockbrokers who don’t act in the best interests of investors should expect securities regulators to start taking a tougher stance, as Wall Street’s top cop signals it’s ready to ramp up enforcement.

Regulation Best Interest, or Reg BI, raised the standard for brokers when it took effect several years ago, directing them to act in the “best interest” of their clients. The rule was part of a decade-long fight over protections for retail investors, including those saving money for college or retirement.

The Securities and Exchange Commission has taken a light touch since the rule took effect, bringing just one lawsuit over alleged violations of Reg BI. But a series of recent alerts from SEC staff suggest the grace period may soon be coming to a close.

“The next phase is enforcement,” Jay Gould of Baker Botts LLP said, adding that the “guidance is out there. You need to know about it, you need to act on it.”

Source: SEC Signals Enforcement Ramp-Up Coming for Conflicted Brokers