John Polise, associate director of the broker-dealer and exchange program at the SEC’s Office of Compliance Inspections and Examinations, told executives in Chicago earlier this summer that the SEC does not plan to do “gotcha” exams.
He promised a more circumspect approach to inspections between now and the rule’s effective date next June. “We may very well ask, ‘What are you doing with BI, what are you thinking about with BI, and how are you thinking about approaching it?’” he added.
Beyond Reg BI compliance, firms will also have to grapple with changes Finra plans to make to its own suitability rule, which the regulator plans to keep but modify, said Bob Colby, Finra’s chief legal officer, on Monday.
Colby said he believes that both Reg BI and Finra’s suitability regs should apply to reps’ recommendations for retail products and strategies.
The goal is to get the proposal before the SEC for approval before Reg BI’s compliance date on June 30, 2020, he added.
Finra has added checklists for Reg BI and Form CRS (the client relationship summary) to its website and plans to hold seminars in the coming months to help firms implement policy and practice changes and understand the key differences between Finra rules and SEC's Reg BI and Form CRS, Colby said.