The Financial Industry Regulatory Authority has been stepping up the number of enforcement actions over violations of Regulation Best Interest, according to Advisor Hub.
A review of FINRA’s disciplinary actions database found that through late November of 2025, FINRA had posted 40 settlement letters or complaints against firms or individuals based on alleged violations of Reg BI. That exceeded the 38 actions taken in all of 2024. More actions, 25, were taken against individual brokers than against firms.
The Securities and Exchange Commission adopted Reg B1 in 2020 to establish a “best interest” standard of conduct under which broker-dealers may not put their financial interests ahead of the interests of a retail customer when making recommendations. Separately, every broker or dealer registered with the SEC is required to file Form CRS, a new customer or client relationship summary.
The annual number of FINRA’s Reg BI enforcement actions has continually increased since 2022, when the authority brought only one BI related case. “The majority of our Reg BI cases involve individuals who have violated the care obligation vis-a-vis the recommendations to retail customers,” said FINRA’s head of enforcement Bill St. Louis said on a podcast posted by the authority. “But we also bring some corresponding cases against member firms for failing to supervise such recommendations.” “We still see firms having fundamental errors and application of the rule,” St. Louis added.
The podcast coincided with FINRA’s 2026 Annual Regulatory Oversight Report, which notes the firm’s approach to ensuring that broker-dealers and brokers comply with Reg BI.
They “must not put their financial or other interests ahead of the interests of a retail customer when making a recommendation,” FINRA’s report said. “The standard of conduct established by Reg BI cannot be satisfied through disclosure alone,” it adds.
FINRA said some of the more common violations occur when brokers or firms are “improperly using the terms ‘advisor’ or ‘adviser’ in their titles or firm names, even though they lack the appropriate registration and do not engage in other activities that allow the use of those terms.”
One example given was a firm that was previously registered as broker-dealer and an investment advisor with the SEC retaining the “advisor” or “adviser” title, implying they are fiduciaries, even after they have withdrawn their investment advisor registration.
The attorneys at Hyman Cotter PC fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry. We have decades of experience representing clients with respect to examinations, investigations and enforcement proceedings initiated by the SEC, FINRA, state securities regulatory agencies and other self-regulatory organizations. If your firm is facing an investigation from a regulatory agency, please contact Hyman Cotter PC at 312-291-4600 or through our online contact form.
