SEC Issues Staff Bulletin Clarifying Care Obligations of Broker-Dealers

On April 20, 2023, the staff (the “Staff”) of the U.S. Securities and Exchange Commission issued a staff bulletin (the “Bulletin”), reiterating the standards of conduct for broker-dealers (as well as investment advisers) in addressing their obligations in providing investment advice and recommendations to retail investors. The Bulletin focused on the care obligation under Regulation Best Interest (“Reg BI”) under the Securities Exchange Act of 1934 applicable to broker-dealers (the “Reg BI Care Obligation” or “care obligations”) and the duty of care under the Investment Advisers Act of 1940. The Staff expressed the view that although the specific application of the care obligations may differ between them and be triggered at different times, the two standards generally result in the same responsibilities being owed to retail investors.

Additional Authors: Marc X.W. Leong