Commissioners Differ on Regulatory Action; SEC Maintains Reg BI Compliance Date

SEC Chairman Jay Clayton said in a statement the June 30, 2020 compliance date for Reg BI and other requirements remains appropriate based on the agency’s engagements with the broker dealer industry.  The Office of Compliance Inspections and Examinations released a risk alert providing broker-dealers and investment advisers with advance information about the expected scope and content of initial examinations for compliance with Reg BI and Form CRS.  OCIE said it will focus on whether firms have made a good faith effort to implement Form CRS, including reviewing the filing and posting of a firm’s relationship summary as well as its process for delivering the relationship summary to existing and new retail investors. Meanwhile, Commissioner Allison Herren Lee in a separate statement acknowledged the business and regulatory challenges posed by the global health crisis. Lee recommended that the SEC continue to extend current and recently closed comment periods to ensure that the public has an adequate opportunity to comment on proposed regulatory actions. Lee also proposed that the SEC “should proceed with great caution in considering whether to take regulatory action outside of that called for by the current dire and pressing public health crisis and its ramifications for the public, investors, markets, and the economy.” Lee said that a careful balancing of interests “suggests that regulatory action in the near term not related to the exigencies created by COVID-19 would rarely be warranted.” Commissioner Elad Roisman appeared to take the opposite view. He urged the Commission to continue on with its regulatory work during the crisis. “Blanket inaction would do a disservice to [investors and market participants] as well as the commenters who took the time to share their views with us over the past several weeks and months.”