More Reg BI Cases in the Pipeline, FINRA Chief Warns

Robert Cook, president and CEO of the Financial Industry Regulatory Authority, said Friday that firms need to beef up their compliance with the Securities and Exchange Commission’s Regulation Best Interest, and noted that more Reg BI-related enforcement cases are in the pipeline.

Speaking at the ALI-CLE Life Insurance Products Conference in Washington, Cook said that FINRA’s Reg BI-related exams have been “evolving as [FINRA] has had more time with Reg BI and as firms have had more time” with the rule. FINRA exams will “continue to evolve in terms of expectations and the depth of what we’re looking for.”

Cook continued: “Anything that would be a violation of the old suitability standard is now going to be a violation under the Reg BI standard.”

FINRA’s suitability Rule 2111 still exists for non-retail customers, so where Reg BI doesn’t apply, suitability continues to fill the gap. However, Reg BI goes farther than suitability.