Category: Broker-Dealers


Interesting Angles on the DOL’s Fiduciary Rule #95

Posted on June 19, 2018, by Fred Reish in Broker-Dealers, fiduciary, RIA, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #95

Regulation Best Interest Recommendations by Broker-Dealers: Part 1

This is my 95th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions and the SEC’s “best interest” proposals.

By now, you probably know that both the SEC’s proposed Regulation Best Interest (“Reg BI”) for broker-dealers and the Interpretation Regarding Standard of Conduct for Investment Advisers (“RIA Interpretation”) have a best interest standard of care. The Reg BI best interest standard is for broker-dealers, while the RIA Interpretation best interest standard is for investment advisers.

At first blush, that suggests that broker-dealers and RIAs will be governed in the same way. That’s not the case.

While the RIA best interest standard applies to all advice to all clients, Reg BI only applies to securities recommendations made by broker-dealers to retail customers. Those are significant differences.

Let’s take a look at that.

Using the … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #94

Posted on June 11, 2018, by Fred Reish in Broker-Dealers, DOL Activity, fiduciary, FINRA, Registered Investment Advisers, RIA, SEC, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #94

SEC Proposed Reg BI and Recommendations of Rollovers (Part 3)

This is my 94th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions and the SEC’s “best interest” proposals.

Part 1 of this series discussed the provisions in the SEC’s proposed Regulation Best Interest that would impose a best interest standard of care for rollover recommendations by broker-dealers and their registered representatives. (More specifically, the standard applies if the rollover recommendation involves securities transactions—which would ordinarily be the case for participant-directed plans.) Part 2 described some of the considerations for developing a best interest recommendation process.

This article—Part 3—describes the proposed requirement to “mitigate” the conflict of interest inherent in a rollover recommendation.

Since a broker-dealer and its representative would not, in most cases, receive any compensation if a participant does not roll over, there is, to use the … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #93

Posted on June 5, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, fiduciary, FINRA, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #93

SEC Proposed Reg BI and Recommendations of Rollovers (Part 2)

This is my 93rd article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions and the SEC’s “best interest” proposals.

In my last post, I described the similarities between the SEC proposed Regulation Best Interest (Reg BI) and the DOL’s Fiduciary Rule (and especially the Best Interest Contract Exemption [BICE]) regarding recommendations to participants to take distributions and roll over into IRAs. The similarities include a best interest standard of care and the treatment of conflicts of interest. This article discusses the requirement of the best interest standard of care in Reg BI and compares it to the standard of care in BICE (and the requirements of FINRA Regulatory Notice 13-45). My next article—Part 3—will cover the conflict of interest issues.

In its discussion of recommendations about distributions and … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #92

Posted on May 30, 2018, by Fred Reish in Broker-Dealers, DOL Activity, fiduciary, FINRA, prudent, Registered Investment Advisers, RIA, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #92

SEC Proposed Reg BI and Recommendations of Rollovers (Part 1)

This is my 92nd article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions and the SEC’s “best interest” proposals.

On April 18, 2018, the SEC released three proposals for comment—Regulation Best Interest (“Reg BI”) for broker-dealers, an Interpretation about the Standard of Conduct for RIAs (“RIA Interpretation”), and a CRS—Customer/Client Relationship Summary for both broker-dealers and RIAs. That was the beginning of a lengthy process, and the outcome is uncertain. However, if these rules are finalized, the impact on the securities industry and investors will be significant.

My first reaction is that Reg BI, which imposes a best interest standard of care on broker-dealers, is strikingly similar to the DOL’s Best Interest Contract Exemption (BICE). There are major differences—for example, the SEC proposal does not create a private … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #91

Posted on May 22, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, fiduciary, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #91

Parallels Between the SEC Regulation Best Interest and the DOL Best Interest Contract Exemption (Part 2)

This is my 91st article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws—including the SEC’s “best interest” proposals.

This article continues my discussion of the similarities between the SEC’s proposed Regulation Best Interest (Reg BI) for broker-dealers and the DOL’s Best Interest Contract Exemption (BICE).

In addition to the standard of care (best interest and loyalty), Reg BI also has enhanced protections for conflicts of interest. Interestingly, they closely parallel the DOL’s conditions in BICE. For example, Reg BI proposes to require that material conflicts of interest involving financial incentives be eliminated or, alternatively, be disclosed and mitigated. The key word is “mitigated.” … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #90

Posted on May 14, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, fiduciary, FINRA, prudent, Registered Investment Advisers, RIA, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #90

Parallels Between the SEC Regulation Best Interest and the DOL Best Interest Contract Exemption (Part 1)

This is my 90th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

The SEC’s proposed Regulation Best Interest (“Reg BI”) is remarkable in its similarities to the DOL’s vacated Best Interest Contract Exemption (“BICE”). This article describes some of those similarities. Keep in mind as you read this that Reg BI applies to securities recommendations, while BICE would have covered any investment or insurance recommendation by a fiduciary advisor.

Reg BI, if finalized, will require that broker-dealers and their representatives act in the “best interest” of “retail customers,” which includes IRA owners and participants. The DOL’s BICE also would have required that … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #85

Posted on April 3, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, FINRA, prohibited transaction, Registered Investment Advisers, RIA, SEC. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #85

The Fiduciary Rule: What’s Next (Part 1)?

This is my 85th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

By now, it’s common knowledge that the 5th Circuit Court of Appeals has thrown out the fiduciary rule. That includes the regulation expanding the definition of fiduciary advice and the related prohibited transaction exemptions, for example, the Best Interest Contract Exemption (BICE). At the same time, the SEC is working on a new “best interest” standard of care, and the DOL is working on amending the fiduciary regulation and related exemptions.

That raises the critical questions . . . where are we now and where are we going?

Let’s start by looking at the issues that the DOL and … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #84

Posted on March 27, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, fiduciary, Plan Sponsors, prohibited transaction, prudent. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #84

What Does the 5th Circuit Decision Mean for Rollover Recommendations?

This is my 84th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

The 5th Circuit Court of Appeals has “vacated” the DOL’s fiduciary rule and exemptions. What does that mean for recommendations to participants that they take plan distributions and rollover to IRAs?

It means a lot . . . in some cases.

But before discussing that, it’s important to note that the decision isn’t applicable yet. At the earliest, it will take effect on May 7. However, if the DOL contests that decision and the courts “stay”–or block—it as the hearings and appeals take place, it may not apply for a year or more . . . or … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #81

Posted on February 27, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, fiduciary, prohibited transaction, Registered Investment Advisers, RIA. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #81

The Fiduciary Rule Prohibits Commissions . . . or Not (Myth #6)

This is my 81st article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

This is another in my series of articles about myths concerning the Fiduciary Rule. The myth for this post is the oft-repeated statement that the Fiduciary Rule prohibits the payment of commissions.

Before getting into the explanation, though, I should give you some background information. Under the prohibited transaction rules in ERISA, a fiduciary advisor cannot make a recommendation that causes a payment from a third party (for example, a 12b-1 fee or an insurance commission) or that directly increases the advisor’s compensation (for example, a commission on a securities transaction). While those ERISA … Read More »


Interesting Angles on the DOL’s Fiduciary Rule #80

Posted on February 21, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, fiduciary, Registered Investment Advisers, RIA. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #80

Is the New Fiduciary Rule Enforceable During the Transition Period? (Myth #5)

This is my 80th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

This is another in my series of articles about myths concerning the Fiduciary Rule. This article deals with the “myth” that the fiduciary rule will not be enforced during the transition period. As the word “myth” suggests, that’s not correct.

As background, the Department of Labor said that it will not, under appropriate circumstances, enforce the requirements of the fiduciary regulation and prohibited transaction exemptions (and, particularly, the Best Interest Contract Exemption [BICE]):

Accordingly, during the phased implementation period from June 9, 2017 to July 1, 2019, the Department will not pursue claims … Read More »




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Interesting Angles on the DOL’s Fiduciary Rule #95

Regulation Best Interest Recommendations by Broker-Dealers: Part 1

This is my 95th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and...

Interesting Angles on the DOL’s Fiduciary Rule #94

SEC Proposed Reg BI and Recommendations of Rollovers (Part 3)

This is my 94th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary...

Interesting Angles on the DOL’s Fiduciary Rule #93

SEC Proposed Reg BI and Recommendations of Rollovers (Part 2)

This is my 93rd article about interesting observations concerning the Department of Labor’s (DOL) fiduciary...