Conflicts of Interest - Disclosure and Management

What this video covers

• Why Regulation Best Interest (Reg BI) is a best-interest standard, not merely a suitability standard, and why a suitable recommendation can still violate Reg BI
• The exact disclosure requirement under Reg BI: material facts relating to conflicts of interest must be disclosed, policies must address them, and the firm's interest can never come first
• The standard-of-care distinction: broker-dealers (BD) are held to Reg BI, while investment advisers (IA) are held to the higher fiduciary duty of loyalty and care
• What constitutes a control relationship (controlled by, controlling, affiliated with, or under common control with the issuer) and why it triggers special disclosure rules
• The two-step control-relationship disclosure timeline: oral disclosure before entering the transaction, then written disclosure at or before completion of the transaction
• Why written disclosure prior to the transaction is an exam trap, and why oral-then-written is the correct sequence
• Common practical conflicts requiring disclosure: revenue-sharing payments, higher commissions on proprietary products, and control relationships with issuers