NASAA Approves Revisions to Model Business Conduct Rule

NASAA amended its Model Business Conduct Rule to incorporate the Reg BI duty of care obligation for investment recommendations to retail customers and to clarify this conduct standard "for purposes of state interpretation and enforcement." 

The amendments to the "Dishonest or Unethical Business Practices of Broker-Dealers and Agents" model rule will clarify that broker-dealers must (i) make recommendations that are "in the best interest of the retail customer" consistent with Reg BI, and (ii) "make all reasonable efforts to avoid or eliminate conflicts of interest." (See previous coverage.) The amendments also prohibit the "misleading use of the professional title 'advisor' or 'adviser.'" (See also NASAA Finds Broker-Dealers are Slow in Meeting Reg BI Standards.)