NASAA’s Regulation Best Interest (“Reg BI”) Implementation Committee yesterday announced the results of Phase II (A) of its coordinated national examination initiative that aimed to provide a look at broker-dealer industry policies and practices one year after the compliance deadline of Regulatory Best Interest by the Security and Exchange Commission (SEC).
Based on a preliminary review, the IPA is concerned with the conclusions, as it is evident that NASAA’s survey methodology was biased in both design and structure. The results ignore the numerous beneficial changes firms have made under Reg BI, and those made even before Reg BI, and the ways the law has thoughtfully increased investor protection while preserving investor choice. The survey is significantly biased against certain products that NASAA has arbitrarily deemed “costly and risky,” while Reg BI was intentionally product agnostic.
Recognizing NASAA’s jurisdictions, rights and the obligation to protect its citizens, the IPA shared its concerns directly with their leadership following the first phase of the survey’s process and offered constructive dialogue with industry representatives to help explain our concerns.
Unfortunately, NASAA disregarded our input, recommendations and request for collaboration and instead built the same fundamental flaws into their second Reg BI Survey.
The results of this survey are significant – it will harm investors across the nation as consumers’ access to portfolio diversifying investments is reduced, which will diminish their ability utilize diversified investment portfolios for their long-term financial security and retirement.