Regulation Best Interest and Form CRS

Richard B. Levin, Daniel McAvoy, and Peter Waltz

Polsinelli PC

May 26, 2020

On June 5, 2019, the Securities and Exchange Commission (“SEC”) adopted Regulation Best

Interest (“Regulation Best Interest” or “Reg BI”), which establishes a new standard of conduct

under the Securities Exchange Act of 1934 (“Exchange Act”) for broker-dealers and persons who

are associated persons of a broker-dealer when making a recommendation of any securities

transaction or investment strategy involving securities for a retail customer.

The SEC also adopted Form CRS which requires SEC registered broker-dealers and investment

advisers, including dual-registrants, to provide a brief relationship summary to retail investors and

new rules and forms to require broker-dealers and investment advisers to provide a brief

relationship summary (“Form CRS”) to retail investors.

Finally, the SEC adopted formal interpretations summarizing existing jurisprudence regarding an

investment advisers’ standard of conduct under the Investment Advisers Act of 1940 (the

“Advisers Act”) and the “solely incidental” prong of the broker-dealer exclusion from the Advisers

Act.

Firms must comply with Regulation Best Interest and Form CRS by June 30, 2020.

Regulation BI and Form CRS

2

Regulation Best Interest imposes a new standard of care on broker-dealers similar, but not

identical, to the fiduciary duties deemed to be imposed on investment advisors under the

antifraud provisions of the Advisers Act, and brings these obligations under the jurisdiction of the

SEC and its Office of Compliance Inspections and Examinations (“OCIE”).

The mission of the SEC is investor protection, regulation of securities markets, and facilitating

capital formation.

There are two consistent themes from the fallout of the 2008 financial crisis – disclosure of

conflicts of interest and protecting retail investors, who may not be as sophisticated as

institutional investors. Every OCIE risk alert regarding examination priorities has noted conflicts

of interest as a priority, and all but one have listed recommendations of products to retail clients

as a priority.

Regulation Best Interest

3

As required by the Dodd-Frank Act, in 2016, the Department of Labor issued a Fiduciary Rule

which would have imposed fiduciary duties on all investment professionals directly or indirectly

providing investment advice to retirement accounts.

Ultimately, this was struck down by a federal court of appeals, leading the SEC to examine

whether other standards of conduct should be imposed on investment professionals.

The definition of investment adviser carves out “any broker or dealer whose performance of

such services is solely incidental to the conduct of his business as a broker or dealer and who

receives no special compensation therefor,” leading to separate conduct standards for two

different types of professionals that make recommendations regarding securities.

Certain studies showed that many retail investors were confused about the services provided

by broker-dealers and investment advisers among other things, leading to the proposal of Form

CRS.

Regulation Best Interest

4

Regulation Best Interest creates four new obligations of broker-dealers:

Disclosure Obligation. Broker-dealers must provide full and fair disclosure of all material

facts relating to the scope and terms of the relationship with the retail investor, as well as

material facts relating to conflicts of interest, before or at the time of a recommendation.

Care Obligation. Firms must exercise reasonable diligence, care and skill when making

recommendations, understand the risks, rewards and costs in connection with the

recommendations made, and consider these factors in light of the retail customer’s

investment profile.

Conflict of Interest Obligation. Broker-dealers must establish, maintain and enforce

written policies that are reasonably designed to address conflicts of interest.

Compliance Obligation. Broker-dealers must establish, maintain and enforce written

policies and procedures reasonably designed to achieve compliance with Regulation Best

Interest.

Duties Under Regulation Best Interest

5

A retail customer is defined as a “natural person, or the legal representative of such natural

person, who:

Receives a recommendation of any securities transaction or investment strategy involving

securities from a broker-dealer; and

Uses the recommendation primarily for personal, family, or household purposes.

To “use” a recommendation includes when, as a result of the recommendation, the broker-

dealer receives or will receive compensation, directly or indirectly as a result of the

recommendation, even if the retail customer does not have an account at the firm.

Who is a Retail Customer?

6

The Regulation Best Interest definition of retail investor differs slightly from FINRA Rule 2210.

Rule 2210 defines a retail investor as any person other than an institutional investor.

The FINRA definition includes any person with total assets of at least $50 million, includingindividuals.

The Regulation Best Interest and Form CRS definition of “retail customer” does not excludehigh net worth individuals and natural persons that are accredited investors.

The definition is intended to capture non-professional legal representatives, but doesn’t applyto regulated financial services industry professionals.

Whether the professionals are regulated should be confirmed and documented atBrokerCheck for U.S. broker-dealers and IARD for U.S. investment advisers.

Who is a Retail Customer?

7

What is a Recommendation?

The definition of “recommendation” is the same as under FINRA Rule 2111 (the suitability rule)

and applicable case law, but new obligations are triggered.

Whether a broker-dealer has made a recommendation that triggers application of Regulation

Best Interest requires a facts and circumstances analysis.

Policies regarding a recommendation should be tailored to the specific firm.

Factors considered in determining whether a recommendation has taken place include whether

the communication “reasonably could be viewed as a ‘call to action’” and “reasonably would

influence an investor to trade a particular security or group of securities.”

8

The more individually tailored the communication to a specific customer or targeted group of

customers about a security or group of securities, the greater the likelihood that the

communication may be viewed as a “recommendation.”

Regulation Best Interest does not apply to investment advice provided to a retail customer by a

dual-registrant when acting in the capacity of an investment adviser, even if the retail customer

has a brokerage relationship with the dual-registrant or the dual-registrant executes the

transaction in a brokerage capacity.

That said, the fiduciary duties of investment advisers would apply.

What is a Recommendation?

9

Before or at the time of the recommendation, a broker-dealer must disclose, in writing, all

material facts about the scope and terms of its relationship with the customer.

This includes:

Disclosure that the firm or representative is acting in a broker-dealer capacity;

Material fees and costs the customer will incur; and

The type and scope of services to be provided, including any material limitations on the

recommendations that could be made to the retail customer.

The broker-dealer must disclose all material facts relating to conflicts of interest associated

with the recommendation that might incline a broker-dealer to make a recommendation that is

not disinterested.

This includes, for example, conflicts associated with proprietary products, payments from third

parties, and compensation arrangements.

Disclosure Obligation

10

OCIE will look at how firms have met the Disclosure Obligation requirement, including:

The capacity in which the recommendation is being made;

Material fees and costs that apply to the retail customer’s transactions, holdings, and

accounts; and

Material limitations on the securities and investment strategies involving securities that

may be recommended to the retail customer.

Regulation Best Interest does not permit a “notice plus access” or “access equals delivery”

method of electronic delivery for disclosures.

Electronic delivery is permitted within the framework of existing guidance, which consists of the

following elements:

Notice to investor that information is available electronically;

Access to information comparable to that which would have been provided in paper form

and that is not so burdensome that the intended recipients cannot effectively access it; and

Evidence to show delivery (i.e., reason to believe that electronically delivered information

will result in the satisfaction of the delivery requirements under the federal securities laws).

Disclosure Obligation

11

One method of satisfying evidence of delivery element is to obtain informed consent from

investors.

Documents that should be considered when assessing compliance with disclosure obligations

include:

Schedules and disclosures regarding fees and expenses to be paid by retail customers,

whether direct or indirect (e.g., custodian fees, account maintenance fees, fees related to

mutual funds and variable annuities, and other transactional fees and product level fees);

Compensation methods for registered personnel, including (i) compensation associated with

recommendations to retail customers, (ii) sources and types of compensation (e.g., direct

payments by an investor, payments by a product sponsor), and (iii) related conflicts of interest

(e.g., conflicts associated with recommending proprietary products or with receiving payments

for inclusion on a product menu);

Disclosure Obligation

12

Disclosure related to monitoring of retail customers’ accounts;

Disclosures on material limitations on accounts or services recommended to retail

customers; and

Lists of proprietary products sold to retail customers.

Investment adviser disclosures that have become more robust since the “Sunshine Speech”

provide a guidepost.

A good rule of thumb – if there is any possibility the broker-dealer, any of its associated

persons, or any of their respective affiliates, or family members might receive a benefit from

making a recommendation, it should be disclosed.

Disclosure Obligation

13

More disclosure should be provided for more complex or risky strategies, such as structured

products, and for ‘big ticket’ items such as IRA rollovers.

Firms should consider how to functionally accommodate delivery of required disclosures in

real-time situations, or to prevent a recommendation from occurring (i.e., cocktail parties,

golfing, etc.).

Form CRS is an entry-level disclosure but, is unlikely to be sufficient to satisfy the disclosure

obligation.

Form CRS should, however, satisfy the obligation to disclose the scope and terms of the

relationship with the customer other than for dual-registrants.

While disclosures frequently can be made alongside Form CRS, there are permitted methods

of delivery of Form CRS that are not permitted for Regulation Best Interest disclosures, i.e.

delivery through the medium through which the retail investor made its own inquiry.

Disclosure Obligation

14

Care Obligation

Under the care obligation, a broker-dealer must exercise reasonable diligence, care and skill

when making a recommendation to a retail customer.

The broker-dealer must understand potential risks, rewards and costs associated with the

recommendation and consider them in light of the customer’s investment profile and have a

reasonable basis to believe that the recommendation is in the customer’s best interest and

does not place the broker-dealer’s interest ahead of the retail customer’s interest.

Similar, but not identical, to the standards of conduct under FINRA’s suitability rule -

reasonable-basis, customer-specific, and quantitative.

15

A broker-dealer should consider reasonable alternatives, if any, offered by the broker-dealer in

determining whether it has a reasonable basis for making the recommendation.

Whether a broker-dealer has complied with the Care Obligation will be evaluated as of the time

of the recommendation (and not in hindsight).

When recommending a series of transactions, the broker-dealer must have a reasonable basis

to believe that the transactions taken together are not excessive, even if each is in the

customer’s best interest when viewed in isolation.

Documents that should be considered, and will be reviewed by OCIE, when assessing

compliance with the care obligation include:

Care Obligation

16

Information collected from retail customers to develop their investment profiles (including

any new account forms, correspondence, and any agreements the customer has with the

broker-dealer).

The broker-dealer’s process for having a reasonable basis to believe that the

recommendations are in the best interest of the retail customer (which may include, e.g.,

any process for establishing, understanding, and implementing the scope of reasonably

available alternatives when making a recommendation).

The factors the broker-dealer considers to assess the potential risks, rewards, and costs of

the recommendations in light of the retail customer’s investment profile.

The broker-dealer’s process for having a reasonable basis to believe that it does not place

the financial or other interest of the broker-dealer ahead of the interest of the retail

customer.

Care Obligation

17

How a broker-dealer makes recommendations related to significant investment decisions, such as

rollovers and account recommendations, and how the broker-dealer has a reasonable basis to

believe that such investment strategies are in a retail customer’s best interest.

How a broker-dealer makes recommendations related to more complex, risky or expensive

products and how the broker-dealer has a reasonable basis to believe that such investments are in

a retail customer’s best interest.

Whether a series of transactions has been adequately identified, indicated by factors such as

turnover rate, cost-to-equity ratio, and use of in-and-out trading.

Ties in with the compliance obligation – there needs to be a balance between maintaining records

to show compliance with the care obligation and not requiring so much documentation that it bogs

down operations.

Notes are particularly helpful when a client does not take the advise or recommendation of

the broker-dealer and decides to do something else.

Documentation of reasonably available alternatives is also helpful, for example when

advising for a higher-cost instrument.

Care Obligation

18

A broker-dealer must establish, maintain and enforce reasonably designed written policies and

procedures addressing conflicts of interest associated with its recommendations to retail

customers.

Policies and procedures must be reasonably designed to:

Identify all such conflicts and at a minimum disclose or eliminate them; and

Mitigate conflicts of interests that create an incentive for an associated person of the

broker-dealer to place its interests or the interest of the firm ahead of the retail customer’s

interest.

Conflicts of Interest

19

When a broker-dealer places material limitations on recommendations that may be made to a

retail customer (e.g., offering only proprietary or other limited range of products), the policies

and procedures must be reasonably designed to disclose the limitations and associated

conflicts and to prevent the limitations from causing the associated person or broker-dealer

from placing the associated person’s or broker-dealer’s interests ahead of the customer’s

interest.

Compensation needs to be evaluated – does not permit sales contests, sales quotas, bonuses

or non-cash compensation based on the sale of specific securities or types of securities within

a limited period of time.

Advisers Act guidance and enforcement actions provide a guidepost for disclosure and

mitigation of certain types of conflicts, but unlike the disclosure regime under the Advisers Act,

mitigation is a requirement even if there is adequate disclosure.

Conflicts of Interest

20

Themes to think about in assessing compliance with the conflicts obligation:

How policies and procedures address conflicts that create an incentive for an associated

person to place its interest or the interest of a broker-dealer ahead of the interest of the

retail customer.

How policies and procedures address conflicts associated with material limitations (e.g., a

limited product menu, offering only proprietary products, or products with third-party

arrangements) on the securities or investment strategies involving securities that may be

recommended to a retail customer.

How policies and procedures address the elimination of sales contests, sales quotas,

volume-driven bonuses, non-cash compensation based on the sale of specific securities or

specific types of securities within a limited period of time and other compensation that

might create an incentive for a broker-dealer to put its own interests ahead of the

customer’s interests.

Whether permitted compensation arrangements are designed to mitigate conflicts.

Conflicts of Interest

21

Themes to consider in assessing compliance with the conflicts obligation:

How policies and procedures establish a structure for identifying conflicts the broker-dealer

or its associated person may face.

How the policies and procedures establish a structure to identify and assess conflicts in

the broker-dealer’s business as it evolves.

How the policies and procedures provide for disclosure of conflicts and what conflicts are

disclosed.

How the policies and procedures provide for mitigation or elimination of conflicts and what

conflicts are mitigated or eliminated.

Whether policies are specifically tailored to the firm’s business and practices.

The SEC has been transparent on what constitutes a conflict of interest.

Years of enforcement actions, settlements, speeches and releases have made it clear what the

SEC believes to be a conflict of interest and what constitutes a suitable disclosure of a conflict

of interest.

Conflicts of Interest

22

Broker-dealers must also establish, maintain and enforce written policies and procedures

reasonably designed to achieve compliance with Regulation Best Interest.

OCIE will review a broker-dealer’s policies and procedures and evaluate any:

Controls

Remediation of noncompliance

Training

Period review and testing included as part of the policies and procedures

Policies should not only be tailored to the firm’s business and strategies, but designed in a way

that they actually can be appropriately monitored and enforced.

Compliance Obligation

23

The OCIE Risk Alert on Examination on Compliance with Regulation Best Interest included an

Appendix with a list of information OCIE may request when conducting examinations of broker-

dealers regarding Regulation Best Interest.

OCIE will expect firms to have the following information readily available:

Description of available brokerage and non-brokerage account types, including advisory

accounts, that a retail customer may establish.

Copy of any schedule of fees and charges that may be assessed for retail customers.

Copy of any grid or schedule or any other documentation given to personnel setting forth a

compensation method.

List of any proprietary products sold to retail consumers.

List of third parties or affiliates with which the firm has arrangements for sale of products to

retail customers.

Copies of marketing materials given to retail customers, including any that use the term

“adviser” or “advisor.”

Compliance Obligation

24

Copies of all written policies, procedures, memos and other material on which the firm relies

for compliance with respect to Regulation Best Interest, which may include the process to:

Identify and disclose, identify and mitigate, and identify and eliminate any conflicts of

interest related to recommendations to retail customers.

Create, update, file, and deliver the Relationship Summary and other disclosures to be

made to retail customers under Regulation Best Interest, including making and

documenting oral disclosures.

Obtain and update customer investment profiles.

Understand the risks, rewards, and costs associated with products offered to retail

customers, and for identifying implicit hold recommendations.

Compliance Obligation

25

Include the process for how the firm determines that it has a reasonable basis to believe that a

recommendation is in the best interest of the retail customer.

Provide any supervisory or compliance reviews or authorizations prior to recommending any

account or product, including any rollovers from other accounts.

Include the process to monitor or surveil trading or account establishment for compliance with

Regulation Best Interest.

Compliance Obligation

26

OCIE will be looking for copies and records of:

The Relationship Summary provided to retail customers and all other documents provided

to retail customers for the purpose of meeting the Disclosure Obligation.

Training materials in respect of Regulation Best Interest.

Surveillance and monitoring reports designed to identify recommendations inconsistent

with Regulation Best Interest, which may include any analysis of account type

recommendations, rollovers, high account turnover, complex products and high risk

products.

For the applicable scope period (see Risk Alert for further detail on each of the following items):

A list of all new accounts established on behalf of individual customers (including new

accounts established for existing customers).

A blotter containing all trading conducted on behalf of individual customers.

A list of retail customers for which a customer investment profile was created or updated.

Compliance Obligation

27

SEC registered broker-dealers and investment advisers, including dual-registrants, must

provide a brief relationship summary to retail investors in addition to, among other things:

Services the firm offers to retail investors

Fees and costs that retail investors will pay

Specified conflicts of interest and standers of conduct

Disciplinary history

For investment advisers, Form CRS will be a new Form ADV Part 3 that will be in addition to

the currently required Form ADV Part 1 and Part 2 Brochures. Further, the Part 3 Form CRS is

subject to different delivery obligations than the Part 2 Brochure.

Form CRS

28

The Form CRS relationship summary does not replace or substitute for any other reporting or

disclosure obligations of an SEC-registered investment adviser.

Compliance with Form CRS is required by June 30, 2020, with delivery of Form CRS to

existing retail investors by July 30, 2020.

The SEC’s stated goal of Form CRS is to provide summary information in a standard way that

allows retail investors to more easily compare investment advisers and broker-dealers, and to

eliminate confusion regarding services, fees and conflicts of interest.

Disclosures are similar to the types of information broker-dealers should disclose pursuant to

Regulation Best Interest and that investment advisers should disclose pursuant to Section 206

of the Advisers Act, which creates the fiduciary duties of all investment advisers, but more

detailed disclosures likely are still required under those laws.

Form CRS

29

Form CRS is to be provided to retail investors – same definition as for Regulation Best Interest.

Firms must file their initial relationship summaries (and any amendments) with the SEC, using

WebCRD (for broker-dealers) or IARD (for investment advisers) post the current relationship

summary on the firm’s public website, if the firm has one, by June 30, 2020.

Broker-dealers must deliver a relationship summary to each retail investor before or at the

earliest of: a recommendation of an account type, a securities transaction, or an investment

strategy involving securities; placing an order for the retail investor; or the opening of a

brokerage account for the retail investor.

Investment Advisers must deliver a relationship summary to each retail investor before or at the

time they enter into an investment advisory contract with the retail investor, even if the

agreement is oral.

By July 30, 2020, firms must deliver the Form CRS to all their existing retail investors.

Recipients of Form CRS

30

Form CRS is limited to 2 pages.

The relationship summary should be in plain English, taking into consideration retail investors’

level of financial experience. See the SEC’s Plain English Handbook.

Should include white space and design features aimed at making the form easy to read.

Charts, graphs, tables and similar features are encouraged, in addition to text features, colors

and graphical cues.

Form CRS – Formatting and Updates

31

When posted online, the relationship summary should include hyperlinks to fee schedules,

conflicts disclosures and other referenced information that is available online.

Updating and Filing Amendments

Form CRS must be updated and filed within 30 days of whenever any information in the

Form CRS becomes materially inaccurate.

The filing must include an exhibit highlighting changes.

Any changes must be communicated to retail investors who are existing clients or

customers within 60 days after the updates are required to be made, and without charge.

Form CRS – Formatting and Updates

32

Delivery and Filing

Done in a timely manner and posted on firm website.

Process for delivering to new retail investors.

Whether policies and procedures address required relationship summary delivery

processes and dates.

Formatting

Plain English and in accordance with the Form CRS Instructions (e.g. design features

aimed at making it easier to read and comprehend, inclusion of chats and graphs,

hyperlinks to pertinent documents).

OCIE Areas of Focus

33

Updates

Policies and procedure for updating the relationship summary to:

Assess how and whether a firm updates and files its relationship summary within 30

days after any information becomes materially inaccurate.

Assess how and whether a firm communicates changes to retail investors within 60

days after updates are required to be made.

Assess the firm’s process for highlighting to retail investors the most recent changes

and including an exhibit highlighting or summarizing material changes with any filed

updates.

Recordkeeping

Records related to delivery of Form CRS, policies and procedures regarding record-making

and recordkeeping.

OCIE Areas of Focus

34

Content

True and accurate information, not omitting material facts necessary in order to make

required disclosures not misleading information about:

How the firm describes the relationships and services it offers to retail investors,

including statements regarding account monitoring and investment authority.

How the firm describes its fees and costs, including disclosures about the principal

fees and costs that retail investors will incur, other fees and costs related to

services and investments that retail investors will pay directly or indirectly, and

examples of the categories of the most common fees and costs applicable to the

firm’s retail investors.

How the firm describes methods of compensation, including cash and non-cash

compensation, and the conflicts of interest those payments create.

How the firm describes its conflicts of interest, including incentives related to

proprietary products, third-party payments, revenue sharing, and principal trading.

Whether the firm accurately discloses if the firm or its financial professionals have

legal or disciplinary history.

OCIE Areas of Focus

35

Broker-dealers and investment advisers required to file Form CRS should immediately work on

doing so.

Before a broker-dealer or investment adviser files Form CRS, it should be reviewed by counsel

and compliance professionals to ensure that it is complete, clear, and written in plain English.

Examinations relating to Form CRS could start immediately after the June 30 compliance date

or July 30 delivery date, and examinations relating to Reg BI are likely to occur within the first

year after the June 30 compliance date.

Firms should also consider how they will satisfy their delivery requirements in the age of social

distancing, particularly in circumstances where some existing clients may have become used to

receiving required disclosures in person.

Broker-dealers and investment advisers should be familiar with the lists and questions in the

Risk Alerts and the documents that will be requested and should be prepared to address these

questions and provide relevant documentation.

Takeaways

36

Investment advisory firms that are not an SEC-registered should confirm whether compliance

might be necessary at the state level. While no state has implemented a Form CRS analog for

state-registered investment advisers, it will be required for dual registrants.

Certain states have instituted laws similar to Regulation Best Interest and, in the case of

Massachusetts, it goes even further than Regulation Best Interest in establishing an actual

fiduciary duty.

State law antifraud regimes still continue to be applicable.

Consider whether to attempt compliance as a matter of best practices.

State Laws

37

Exchange Act Release No. 86032, Form CRS Relationship Summary, Amendment to Form ADV

(final rule) (June 5, 2019), 84 Fed. Reg. 33492 (July 12, 2019),

https://www.sec.gov/rules/final/2019/34-86032.pdf

FINRA Regulation Best Interest Guidance, https://www.finra.org/rules-guidance/key-

topics/regulation-best-interest

FINRA SEC Regulation Best Interest Resource Webpage, https://www.finra.org/rules-

guidance/key-topics/regulation-best-interest#notices

Form CRS Instructions, https://www.sec.gov/rules/final/2019/34-86032-appendix-b.pdf

Frequently Asked Questions on Form CRS, https://www.sec.gov/investment/form-crs-faq

Frequently Asked Questions on Regulation Best Interest, https://www.sec.gov/tm/faq-regulation-

best-interest

Investment Advisers Act Release No. 5248 (June 5, 2019), 84 Fed. Reg. 33669 (July 12, 2019),

https://www.govinfo.gov/content/pkg/FR-2019-07-12/pdf/2019-12208.pdf

Investment Advisers Act Release No. 5249 (June 5, 2019), 84 Fed. Reg. 33681 (July 12, 2019),

https://www.govinfo.gov/content/pkg/FR-2019-07-12/pdf/2019-12209.pdf

Sources

38

Investors Remain Front of Mind at the SEC: Approach to Allocation of Resources, Oversight

and Rulemaking; Implementation of Regulation Best Interest and Form CRS, SEC Chairman

Jay Clayton (April 2, 2020), https://www.sec.gov/news/public-statement/statement-clayton-

investors-rbi-form-crs

Regulation Best Interest: The Broker-Dealer Standard of Conduct, Exchange Act Release No.

34-86031 (June 5, 2019), 84 Fed. Reg. 33318 (July 12, 2019),

https://www.govinfo.gov/content/pkg/FR-2019-07-12/pdf/2019-12164.pdf

Risk Alert: Examinations that Focus on Compliance with Regulation Best Interest (April 7,

2019), https://www.sec.gov/files/Risk%20Alert-

%20Regulation%20Best%20Interest%20Exams.pdf

Risk Alert: Examinations that Focus on Compliance with Form CRS (April 7, 2019),

https://www.sec.gov/files/Risk%20Alert%20-%20Form%20CRS%20Exams.pdf

SEC Plain English Handbook (August 1998), https://www.sec.gov/pdf/handbook.pdf.

SEC Regulation Best Interest Small Entity Compliance Guide,

https://www.sec.gov/info/smallbus/secg/regulation-best-interest

Sources

39

To learn more about our FinTech and Regulation practice, or to contact a member of our team,

click here or visit our website at polsinelli.com.

For additional information, please call or email:

Richard B. Levin

Chair FinTech and Regulation Practice

Tel. 303-583-8261

Email: rlevin@polsinelli.com

Daniel L. McAvoy

Shareholder

Tel. 212-413-2844

Email: dmcavoy@polsinelli.com

Peter F. Waltz

Shareholder

Tel. 303-583-8254

Email: rlevin@polsinelli.com

Contacts

40

Ranked by Chambers USA, Polsinelli’s FinTech and Regulation practice helps clients meet the

challenges posed by the development of these new technologies. Bringing together attorneys

from across the firm, members of the FinTech and Regulation practice advise clients on a variety

of matters, including corporate and transactional issues, cybersecurity, government

investigations and compliance, intellectual property, labor and employment, litigation, public

policy, securities, and corporate finance and tax.

The practice represents clients before the U.S. Securities and Exchange Commission, the U.S.

Commodity Futures Trading Commission, the National Futures Association, the Financial

Industry and Regulatory Authority, the U.S. Department of the Treasury, the Office of the

Comptroller of the Currency, and state banking regulators.

Financial Technology and Regulation

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Richard B. Levin, Chair FinTech and

Regulation Practice

303.583.8261 | rlevin@polsinelli.com

Richard Levin’s practice focuses on the representation of early stage and

publicly traded companies in the FinTech industry, including broker-dealers,

exchanges, alternative trading systems (ATSs), investment advisers, hedge

funds, designated contract markets, swap execution facilities, peer to peer

lending platforms, robo-advisers, crowdfunding portals, and digital currency

platforms. He represents these firms before the U.S. Securities and

Exchange Commission (SEC), the U.S. Commodity Futures Trading

Commission (CFTC), the National Futures Association (NFA), the Financial

Industry and Regulatory Authority (FINRA), the U.S. Department of the

Treasury, FinCEN, state banking regulators, and Congress.

Richard has been advising clients on FinTech issues since 1999 when he

was the general counsel of one of the first ECNs/ATSs. He served as the

assistant general counsel and regulatory affairs officer of KCG, and played a

leadership role in the launch of several joint ventures of leading investment

banks – EquiLend and BIDS Trading.

He is a frequent speaker at conferences on blockchain technology,

regulatory, and market structure issues and is the co-author of the chapter

on U.S. regulation of virtual currencies for the Handbook of Digital

Currency and the chapter of the Handbook of Blockchain, Digital Finance,

and Inclusion on SEC and CFTC regulation of blockchain technology – both

published by Elsevier, Code is Not Law from Blockchain in Financial markets

and Beyond, and the chapter on regulation of robo-advisers in WealthTech –

Wealth Management in the FinTech Age.

43

Speakers

Daniel L. McAvoy, Shareholder

212.413.2844 | rdmcavoy@polsinelli.com

Dan McAvoy focuses his practice on private closed-end investment funds,

corporate finance and M&A with a focus on private investment fund

transactions, including complex GP-led restructurings, purchases and sales

of illiquid asset portfolios and other secondary transactions. Dan is a trusted

adviser to numerous investment advisers, fund sponsors and investors, and

has represented a range of companies, from startups to Fortune

500 companies. Dan has also represented portfolio companies and sponsors

through all parts of the corporate life cycle, including formation, venture

financings, add-ons, stock sales, asset sales, private and public mergers and

initial public offerings.

Dan represents private equity-style funds of all types – private equity,

venture capital, growth capital, special opportunities, debt, real estate and

multi-property opportunity zone funds, with a particular focus on private

equity secondaries funds and funds-of-funds. In addition, he has represented

operating companies in a wide variety of transactions such as Regulation A+

offerings, at-the-market offerings, registered direct offerings, initial public

offerings, Rule 506(c) offerings, acquisitions and divestitures. Dan likes to

stay on the cutting edge of the law and has experience with security tokens,

fractionalization and other blockchain-related transactions and regulatory

advice.

44

Speakers

Peter F. Waltz, Shareholder

303.583.8254 | pwaltz@polsinelli.com

Peter Waltz is dedicated to helping clients achieve their objectives by

employing a comprehensive, interdisciplinary approach to their legal and

business challenges. He advises companies in all phases of the business

cycle and provides ongoing advice and counsel on day-to-day operational,

business, and legal issues. This focus includes the preparation and

negotiation of documents related to entity selection and formation, corporate

structure, corporate governance, and commercial contract matters. Peter

advises a variety of clients with their business transactions, capital raising

transactions, and general corporate matters.

Peter’s broad corporate and corporate finance practice includes advising

clients with respect to mergers and acquisitions, securities offerings, periodic

reporting under the federal securities laws, and other aspects of securities

regulation and general corporate counseling. He is regularly involved in

structuring, negotiating, and closing asset and equity acquisitions and sales,

mergers, and a broad range of strategic transactions. Further, Peter has

significant experience in advising clients regarding transactions, compliance

with periodic reporting, and other disclosure requirements under the federal

securities laws. Peter advises public and private clients, closely held

businesses, and advises clients with shareholder disputes. His experience

extends across a wide range of industries, including the health care, financial

services, professional services, information technology, and food industries.

Prior to law school, Peter worked in the financial industry and was licensed

as a registered representative with the Financial Industry Regulatory

Authority.

45

Speakers

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