While some have noted that the SEC could have brought this same complaint under Reg BI’s predecessor suitability standard, “the allegedly violative conduct took place after the effective date of Reg BI (in June 2020), so the SEC properly brought the charges under Reg BI,” Rubin said.
“The fact that the SEC has finally filed its first Reg BI action shows firms that the transition period is over, and if they run afoul of the rules, the regulators will go after them,” Rubin added.