Proposal seeks to clarify and enhance obligations applicable to a broker-dealer’s retail customer interactions, but may raise more questions than answers.

The Securities and Exchange Commission (SEC) proposed for public comment Regulation Best Interest (the Best Interest Proposal) on April 18, 2018.1 If adopted as proposed, the Best Interest Proposal would require a broker-dealer and natural persons who are associated persons of a broker-dealer (together referred to herein as the broker-dealer) to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to the retail customer (the Best Interest Standard). A significant element of the proposed Best Interest Standard is that the broker-dealer not place its financial or other interest ahead of the interest of the retail customer.