SEC Rulemakings and Interpretations Addressing Investment Adviser and Broker-Dealer Standards of Conduct and Disclosure Obligations
The Securities and Exchange Commission (“SEC”) recently adopted a package of rulemakings and interpretations that address the standards of conduct and disclosure obligations applicable to investment advisers and broker-dealers. Specifically, the SEC: (i) published an interpretation of the standard of conduct for investment advisers (the “Adviser Fiduciary Interpretation”); (ii) adopted Form CRS, a customer relationship summary form that registered investment advisers and broker-dealers must provide to retail investors; (iii) adopted Regulation Best Interest, which establishes a standard of conduct for broker-dealers and their associated persons; and (iv) published an interpretation of the “solely incidental” prong of the broker-dealer exclusion from the “investment adviser” definition under the Investment Advisers Act of 1940 (the “Advisers Act”) (collectively, the “SEC Releases”).
We summarize in this memorandum our key takeaways from the SEC Releases for fund managers, focusing primarily on the Adviser Fiduciary Interpretation. Following our key takeaways is a more in-depth summary of the SEC Releases, again focusing primarily on the Adviser Fiduciary Interpretation.