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What Really Constitutes an Appropriate Investment Recommendation?

The SEC's Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934 establishes a "best interest" standard of conduct for broker-dealers and associated persons when they make a recommendation to a customer of any securities transaction or investment strategy.  These obligations are critical to ensuring investor protection and promoting fair dealings with customers and ethical sales practices.  

Reb BI requires that a broker-dealer exercise reasonable diligence, care, and skill when making a recommendation to a retail customer.  The broker-dealer must understand potential risks, rewards, and costs associated with the recommendation.  The broker-dealer must then consider these factors in light of the customer’s investment profile and make a recommendation that is in the customer’s best interest . The standard of conduct draws from key fiduciary principles and cannot be satisfied through disclosure alone.

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

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