Which Standard Applies to a Recommendation

What this video covers

• How to identify a retail customer under Regulation Best Interest (Reg BI): a natural person using the account primarily for personal, family, or household purposes
• Why the suitability rule catches every recommendation that Reg BI does not reach, including natural persons with business-purpose accounts and institutional accounts held by entities
• The absolute golden rule that the two standards never stack, and why FINRA's suitability rule text explicitly steps aside when Reg BI governs
• How the $50 million catch-all in the institutional-account definition can include a wealthy natural person, yet Reg BI still wins if that person uses the recommendation for personal purposes
• The two conditions for the institutional exemption under the suitability rule: reasonable basis to believe independent risk evaluation, plus affirmative indication of independent judgment
• Why the institutional exemption removes only customer-specific suitability, while reasonable-basis suitability and quantitative suitability fully survive
• How delegated authority shifts the exemption test from the underlying institutional customer to the agent, such as an investment adviser or bank trust department