Investors filed 37 Reg BI claims with Finra against brokers this year as of the end of May, marking the first time complaints tied to the rule have been among the regulator's regularly published list of most cited violations.

The top Finra arbitration claim categories were breach of fiduciary duty (485), negligence (443), failure to supervise (387), breach of contract (363), misrepresentation (351) and suitability (330), according to the regulator's report.

Reg BI, a fiduciary rule the Securities and Exchange Commission (SEC) approved in an effort to reduce sales abuses and costly conflicts of interest among broker-dealers, entered Finra’s top arbitration controversies list at number 14, with investors filing 37 Reg BI claims through May.

“This may represent a growing awareness of the SEC rule and is the first tranche of actionable claims since the final regulation went into effect on June 30, 2020,” the Bates Group, a securities and financial services consulting and litigation firm, said in a new blog.

The group called the catapulting of Reg BI onto the list “inevitable, if somewhat subtle.”

Attorney Joe Wojciechowski, who filed his first Reg BI arbitration claim in early July, said he believes Reg BI will be “the future of customer arbitration cases. Going forward it’s a pretty good sword for investors in arbitration. In some instances, it’s better than suitability.”

Wojciechowski filed a claim against Cabot Lodge Securities LLC on behalf of 18 investors in June alleging that the firm violated Reg BI’s care and conflict of interest obligations when it sold retirees in their 60s and 70s high-risk bonds between 2020 and 2022.

The claim followed the SEC’s first Reg BI civil claim against Western International Securities in June.

Wojciechowski said the SEC’s Western International case provided a “blueprint” for how the agency will interpret and enforce the rule. “That was big step by SEC and paved the way and showed us how it needs to be done. And that’s what we’re going to run with,” he said.

The attorney said his law firm, Stoltmann Law Firm, is working on filing a second Reg BI arbitration claim against Cabot Lodge this week on behalf of at least 15 additional investors.

Wojciechowski said that under Reg BI, “it is the duty of every brokerage firm to perform reasonable due diligence on investments prior to offering them to their clients to ensure the brokerage firm understands the risks, characteristics, benefits and costs of any security ... and to be aware of red flags which may undermine the investment's ability to perform.”

Claims of suitability violations will be still be used if the alleged abuses took place before Reg BI went into effect, Wojciechowski noted.