SEC Chairman Jay Clayton testifies during a Senate Banking Committee hearing in 2018. Photo: Tom Williams/CQ Roll Call via Getty Images

The SEC has passed Regulation Best Interest, a new rule requiring stockbrokers and financial advisers to act in the best interest of their clients.

Yes, but: There are some caveats. The rule does not require brokers to recommend the lowest-cost mutual funds or other types of products, something the financial industry opposed. Critics also are wary of the lack of enforcement mechanisms.

  • Reactions were incredibly mixed, with even SEC officials delivering strongly worded rebukes of the decision.

What they're saying:

  • SEC chairman Jay Clayton: "Regulation Best Interest will substantially enhance the broker-dealer standard of conduct."
  • SEC commissioner Robert Jackson, the lone vote against the proposal in a 3-1 decision: "Regulation Best Interest lowers the bar we set in last year's proposal." It's a "weak mix of measures" that does not even define the term best interest.
  • Investment Company Institute president and CEO Paul Schott Stevens: "Regulation Best Interest will better serve investor interests by ensuring investors are afforded strong protections when they receive recommendations from broker-dealers."
  • Christine Lazaro, president of Public Investors Arbitration Bar Association: "With the new rule, investors are left believing that their brokers will do what is best for them, when in fact, their brokers may still be influenced by insidious conflicts of interest."
  • John Lukanski, a partner at law firm Reed Smith, told Financial Planning: "My overall sense is that there is this promise of clarity, but in reality we are going to get a bunch of chaos."

Go deeper: Financial advisers may be forced to look out for clients again

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Photo: Andrew Caballero-Reynolds/AFP via Getty Images

The Biden campaign, the Democratic National Committee and their joint fundraising committees announced Wednesday that they raised $140 million in July.

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