In contrast, he said, “the B-D’s obligation is illustrated as ‘We must act in your best interest and not place our interest ahead of yours when we recommend an investment strategy involving securities.’ However, the practical definition and application of acting in the ‘best interest’ is not articulated in the stand-alone CRS form for B-Ds.
“This leaves many open questions—particularly, what is the meaning of best interest and how does it differ from a fiduciary standard, if at all?
“If the testing results demonstrate continued investor confusion,” Certner added, “the [SEC] will need to take additional steps to distinguish B-Ds from IAs, including but not limited to possibly making further changes to its proposed forms, developing tighter restrictions on titles and marketing practices, and further minimizing differences between the standards that apply to B-Ds and IAs.”