Securities Fraud Blog
The United States Securities Exchange Commission (SEC) recently issued a Staff Bulletin which discussed the use of sales contests or other sales incentives by FINRA Broker-Dealer firms in the context of SEC Regulation Best Interest (Reg BI).
Reg BI, 17 CFR 240-15l-1, specifically describes the “best interest” obligation as follows in section (a)(1):
“A broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest of the retail customer.”