| name | reg-bi-policy |
| title | Suitability and Best Interest Policy (Reg BI) |
| description | Drafts board-ready Suitability and Best Interest policies for broker-dealers under FINRA Rule 2111 and SEC Regulation Best Interest (Reg BI). Covers the four Reg BI component obligations, suitability framework, Form CRS integration, supervision, and recordkeeping. Use when drafting Reg BI compliance policies, suitability procedures, or best interest obligation frameworks for financial services firms. |
| author | CaseMark |
| author_url | https://github.com/CaseMark/skills/tree/main/skills/legal/reg-bi-policy |
| license | Apache-2.0 |
| version | 0.1.0 |
| execution_mode | open |
| jurisdiction | us |
| practice | securities |
| language | en |
Suitability and Best Interest Policy (Reg BI)
Drafts a board-ready compliance policy governing broker-dealer recommendations to retail customers under FINRA Rule 2111 and SEC Reg BI (17 CFR 240.15l-1).
Prerequisites
Gather before drafting:
- Firm details — business model, product offerings, compensation structures, org chart
- Existing compliance materials — current policies, manuals, supervisory procedures
- Product inventory — securities, strategies, and product types offered
- Compensation arrangements — all structures, revenue-sharing, third-party payments
Quick Start
Draft a formal policy with hierarchical section numbering (1.1, 1.2, etc.) suitable for board approval. Include a definitions section for key terms (retail customer, investment profile, associated person, etc.). Use the section order below.
Policy Sections
1. Policy Statement
- Commitment to FINRA Rule 2111 and Reg BI compliance
- Integration with firm's broader compliance framework
- Effective date and review cycle
2. FINRA Rule 2111 Suitability Framework
| Component | Scope | Key Requirements |
|---|
| Reasonable-Basis | Product/strategy | Due diligence on risks, rewards, costs, complexity, liquidity, volatility; written approval; enhanced review for complex/novel products |
| Customer-Specific | Individual customer | Match to investment profile: age, finances, tax status, objectives, experience, time horizon, liquidity needs, risk tolerance |
| Quantitative | Transaction patterns | Turnover ratios, cost-to-equity ratios, trading frequency; customer-initiated vs. recommended; review thresholds |
For customer-specific suitability, also address:
- Minimum information requirements before any recommendation
- Profile update intervals and life-event triggers
- Protocols when customers decline to provide information
3. Reg BI Four-Obligation Framework
3a. Disclosure Obligation
Written disclosure before or at time of recommendation, in plain English:
