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Now Effective: SEC Interpretations Relating to the Fiduciary Duty of Investment Advisers and the “Solely Incidental” Exclusion

Date: 15 July 2019
U.S. Investment Management Alert
By: Richard F. Kerr, Pablo J. Man, Eden L. Rohrer, Andrew J. Shipe, C. D. Peterson, Andrew J. Shipe

At an Open Meeting on June 5, 2019, the Securities and Exchange Commission (“SEC”) formally adopted: (1) an interpretation of an investment adviser’s fiduciary duties; and (2) an interpretation of the “solely incidental” prong of the broker-dealer exclusion from the definition of an “investment adviser” under the Investment Advisers Act of 1940. The interpretations became effective immediately on June 12, 2019, upon publication in the Federal Register. We previously published client alerts discussing these interpretations, and those can be found below.

These actions were adopted on the same day as a new Regulation Best Interest, which establishes a new standard of conduct that requires broker-dealers (and their associated persons) to act in the “best interests” of their “retail clients” when recommending securities and investment strategies, and a new Form CRS, which broker-dealers and investment advisers will be required to provide to retail investors. Adopting Releases for Regulation Best Interest and Form CRS were also published on July 12, 2019 and are effective June 30, 2020. Please visit our HUB page for additional information and materials.

This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Any views expressed herein are those of the author(s) and not necessarily those of the law firm's clients.

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