Regulation Best Interest (Reg BI)
Chapters in this video
- 0:00 The broker-dealer speedboat scenario and dual enforcement preview
- 1:22 Retail customer definition: natural person, personal use
- 2:37 The Hawaii sales contest: a textbook Reg BI violation
- 3:30 Institution versus retail: why hedge funds get no shield
- 3:50 Barry the broker-dealer versus Alice the investment adviser
- 5:14 NASAA adoption and the double whammy enforcement mechanism
- 6:21 Rapid-fire exam recap
What this video covers
- The exact definition of a retail customer: a natural person using a recommendation for personal, family, or household purposes
- Why Reg BI applies to broker-dealers and their associated persons only, and never to investment advisers or their representatives
- The fiduciary standard as the separate governing rule for investment advisers, and why mixing the two standards is the most common exam trap
- Whether a recommendation to an institutional client triggers Reg BI, and why institutions are explicitly excluded from its protections
- How NASAA incorporated Reg BI into its Statement of Policy on Dishonest or Unethical Business Practices, making compliance a state law obligation
- Why a single Reg BI violation produces dual enforcement: federal SEC action plus state administrator action
- How to identify the commission-trip and sales-contest scenarios as classic Reg BI violations when the broker-dealer's interest drives the recommendation
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. When you're ready to drill the topic, the full Series 63 course adds adaptive practice questions and spaced-repetition flashcards.