Seven states and the District of Columbia have filed a lawsuit against the Securities and Exchange Commission in an effort to block the regulator’s recently approved Regulation Best Interest (Reg BI) rule package.
The lawsuit, filed Monday in the U.S. District Court in the Southern District of New York, is being brought by the attorneys general of New York, California, Connecticut, Delaware, Maine, New Mexico, and Oregon, in addition to Washington D.C. It contends Reg BI “undermines critical consumer protections for retail investors, increases confusion about the standards of conduct that apply when investors receive recommendations and advice from broker-dealers or investment advisers, makes it easier for brokers to market themselves as trusted advisers (while nonetheless permitting them to engage in harmful conflicts of interest that siphon investors’ hard-earned savings), and contradicts Congress’s express direction.”
