Federal stockbroker regulations help protect investors against fraudulent investment losses. The U.S. Securities and Exchange Commission (SEC) is responsible for adopting and enforcing these regulations, and it issues updates, additions and changes from time to time. Stockbroker fraud lawyer Jake Zamansky takes a look at some of the most noteworthy recent changes for investors.
Regulation Best Interest (Regulation BI)
One of the most significant recent regulatory updates by far is the SEC’s adoption of Regulation Best Interest (Regulation BI). While it has now been four years since the SEC adopted Regulation BI, many stockbrokers are still struggling to comply (or choosing not to comply)—and this is leading to a significant amount of litigation in this area. Regulation BI established important new rights for investors, and, if you have reason to suspect that your broker has not acted in your best interests, you should talk to a stockbroker fraud lawyer right away.
New Mandatory Climate-Related Disclosures
In March of 2024, the SEC adopted new rules intended to “enhance and standardize climate-related disclosures by public companies and in public offerings.” While this rule applies to public companies and not stockbrokers, stockbrokers have a general duty to provide suitable investment advice and warn of the risks associated with proposed investments—and a broker’s failure to adequately consider a company’s climate-related disclosures could justify a claim for stockbroker fraud in some cases.
New Registration Requirements for Certain Dealer Roles
In February of 2024, the SEC announced new registration requirements (among others) for certain dealer roles within the securities industry. As the SEC explained in its announcement, these new rules “require market participants who engage in certain dealer roles, in particular those who take on significant liquidity-providing roles in the markets, to register with the SEC, become members of a self-regulatory organization (SRO), and comply with federal securities laws and regulatory obligations.” By establishing a new class of “dealers” who are subject to the Commission’s oversight, the SEC has further expanded the protections afforded to investors and the options investors have available when they fall victim to fraud.
Amended Registration Rules for “Internet Investment Advisers”
Also in 2024, the SEC announced a regulatory update that amends the registration rules for “internet investment advisers.” As the SEC explains, this change is intended to “modernize” its existing rules in order to “account for the evolution in technology and the investment advisory industry.” The change also eliminates the de minimis exception for internet investment advisers’ non-internet clients, “thus requiring an internet investment adviser to provide advice to all of its clients exclusively through an operational interactive website.”
Request a Free Consultation with a Stockbroker Fraud Lawyer at Zamansky LLC
While these recent changes in the federal stockbroker fraud regulations (among others) are intended to help protect investors, stockbroker fraud remains a very real concern. If you believe you may be a victim of fraud, we encourage you to call 212-742-1414 or contact us online to arrange a free consultation with a stockbroker fraud lawyer at Zamansky LLC.