Urge NASAA to Withdraw Proposed Broker-Dealer Model Rule Changes
Write to your state regulator and NASAA before the December 4th deadline and urge them to withdraw the proposed changes to its Broker-Dealer Model Rule. The changes contain troubling provisions:
New broker-dealer obligations that conflict with Reg BI, and a state “menu” of options leading to regulatory fragmentation and confusion.
“Reasonably Available Alternatives” – Reformulation of the SEC’s “reasonably available alternatives” requirement, focusing solely on “costly” and “risky” products, unlike the SEC’s nuanced, product agnostic, test.
Compensation -- Presumption that any form of compensation other than sales charges and 12b-1 fees are not in the best interest of the customer.
"Recommendation” – Expansion of “recommendation" to cover merely the promotion of account types, securities and investment strategies.
"Neutralize Conflicts” -- A new and novel concept of “neutralize” with a corresponding preclusion of disclosure as a stand-alone solution for any conflict of interest.
The NASAA Exam Report accompanying the proposal calls out “complex, costly, risky” products, and specifically focuses on non-traded REITs and private securities.
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