In Case You Missed It: Broker Dealer Law Blog – Summer 2023

The Broker-Dealer Regulation & Litigation Digest is a periodic compilation of the most read blog posts published on the Broker-Dealer Law Blog during the last few months. Catch up on the latest insights on litigation, regulatory, compliance and fiduciary issues impacting broker-dealers and other financial services companies.

A New Opportunity for 529 Account Beneficiaries – Tax Free Rollovers to Roth IRAs

By Fred Reish and Joan M. Neri
Beneficiaries of qualified tuition programs under Section 529 of the Internal Revenue Code (529 accounts) will have a new opportunity starting January 1, 2024. Under SECURE Act 2.0 (the Act), 529 account beneficiaries will be able to rollover funds from the 529 account into a Roth IRA without incurring tax or penalties providing certain requirements are met.

The Best Interest Standard for Recommending Account Types

By Fred Reish and Joan M. Neri
Under Regulation Best Interest, the Securities and Exchange Commission (SEC) imposes a best interest standard on account recommendations by broker-dealers. This is because recommending an account type is viewed by the SEC as recommending an investment strategy involving securities. The SEC imposes a similar best interest standard on registered investment advisers under the SEC’s Interpretation Regarding Standard of Conduct for Investment Advisers.

Investors Versus Machines: The SEC Cracks Down on AI, Robo-Advisors and Potential Conflicts of Interest

By Sandra D. Grannum, Jamie L. Helman and Justin M. Ginter
Artificial intelligence (AI) tools are divisively integrating into all aspects of society — from the classroom to the courtroom. Many broker-dealers have also implemented AI-assisted analytics and technology. No one is questioning the “pros” of AI. But many are still concerned about the risks. The SEC is no different, nor are they any less divided. Here, the SEC has honed in on conflicts of interest that may arise through the use of AI.

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