The SEC’s Regulation Best Interest has important implications for institutionally focused broker-dealers and investment bankers.

On June 5, 2019, the US Securities and Exchange Commission (SEC) adopted Regulation Best Interest (Rule 15l-1 under the Securities Exchange Act of 1934), a rule that requires a broker-dealer registered with the SEC to act in the best interest of its retail customers when making a recommendation of any securities transaction or investment strategy involving securities. Notably, Regulation BI’s definition of “retail customer” is substantially more broad than the Financial Industry Regulatory Authority’s (FINRA’s) definition, and therefore firms that view their business as exclusively institutional under existing definitions may need to consider adopting new policies and procedures in advance of June 30, 2020, the implementation date.