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Regulation BI further provides a number of disclosure requirements so that clients are fully apprised of the characteristics, risks, costs and other materials facts associated with every transaction. Regulation BI provides that a “broker, dealer, or a natural person who is an associated person of a broker or dealer, when making a recommendation of any securities transaction or investment strategy involving securities (including account recommendations) to a retail customer, shall act in the best interest of the retail customer at the time the recommendation is made, without placing the financial or other interest of the broker, dealer, or natural person who is an associated person of a broker or dealer making the recommendation ahead of the interest of the retail customer.” In other words, the broker must always put the client’s interest first. Regulation BI is codified in the Code of Federal Regulations at.
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In 2019, the Securities and Exchange Commission (“SEC”) created Regulation Best Interest, also known as Regulation BI, which established a “best interest” standard of conduct for broker-dealers and Financial Advisors when making recommendation to clients.