Regulation Best Interest (Reg BI)

Regulation Best Interest, which took effect in 2020, requires a broker-dealer to act in the retail customer's best interest when recommending a security or strategy — and not to put the firm's financial interests ahead of the customer's. It imposes specific duties of care, disclosure, conflict-of-interest management, and compliance.

Crucially, the 'care' obligation requires the broker to understand the product's risks, rewards, and costs and to have a reasonable basis to believe the recommendation is in your best interest given your investment profile.

Complex structured products — auto-callables, worst-of notes, reverse convertibles — carry risks and costs that are difficult for retail investors to evaluate. Recommending them to conservative or income-focused investors, or concentrating an account in them, can violate the best-interest standard.

FINRA's 2026 review of higher-risk structured products is expressly examining whether firms' recommendations complied with Regulation Best Interest, making Reg BI central to many current claims.

If a broker recommended an unsuitable structured product, failed to disclose its risks or conflicts, or ignored your stated goals, that conduct may support a claim in FINRA arbitration. The best-interest standard gives investors a clear benchmark against which the recommendation can be measured.