Form CRS and Regulation Best Interest

Reg BI is a rule issued by the SEC that requires broker-dealers and their associated persons to act in the best interest of the retail customer at the time an investment recommendation is made, without placing the financial or other interests of the broker-dealer ahead of the interests of the retail customer. The rule also requires broker-dealers to identify potential conflicts of interest and financial incentives they may have when making recommendations to their customers.

This higher standard of conduct applies when recommending:

· Securities transactions; or

· Investment strategies involving securities, including account types; or

· Opening an IRA or brokerage account; or

· Rolling over assets from one account type to another

Reg BI was adopted by the SEC to establish a higher conduct standard for broker-dealers when making investment recommendations to retail customers.

Yes, Reg BI requires brokerage firms that provide recommendations to retail investors to act in the investors’ best interest when making those recommendations. In addition, both brokerage firms and investment advisers are required to provide Form CRS (Customer Relationship Summary) to retail investors.

Reg BI applies when a broker-dealer makes a recommendation to a retail customer regarding a securities transaction, investment strategy, or account type.

Yes. Reg BI applies only to broker-dealers. Investment advisers are subject to their own requirements under the Investment Advisers Act of 1940. But the Form CRS requirements apply to both brokers and investment advisers.

Reg BI applies to investment recommendations made to new customers, prospective customers, and existing customers.

As defined in Regulation Best Interest, a “retail customer” is 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 or a natural person who is an associated person of a broker or dealer; and

· uses the recommendation primarily for personal, family, or household purposes.

The Financial Industry Regulatory Authority (FINRA) examines firms and enforces compliance with Reg BI based on SEC guidance. FINRA works with the SEC to promote consistency in examining broker-dealers and their associated persons for compliance with Reg BI.

Form CRS requires broker-dealers and registered investment advisers to provide retail investors with a relationship summary containing certain information about the firm. A broker-dealer’s Form CRS is limited to two pages. There are five (5) specific sections on Form CRS which include:

· Introduction: explains that brokerage and investment advisory services and fees differ, and that it is important for a retail investor to understand those differences.

· Relationship and Services – Describes the relationship and services offered, including a discussion of whether the firm provides account monitoring services, potential investment authority, any limitations on offerings and account minimums.

· Fees, Costs, Conflicts, Standard of Conduct – Firms must provide detailed descriptions about the fees and costs that their retail investors will pay, their conflicts of interest, and applicable standard of conduct in making investment recommendations to retail investors.

· Disciplinary History – The firm must provide disclosures of disciplinary information regarding the firm and its financial professionals.

· Where to find additional information – The firm must provide instructions regarding where a retail investor can find more information about the firm and the services it offers.

If you are working with a broker-dealer, you must receive Form CRS 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 you; or the opening of a brokerage account for you. If you are working with an investment adviser, you must receive Form CRS before or at the time you and your adviser enter into an investment advisory relationship.

To provide information about our services, fees, costs and conflicts of interest, and to help you ask informed questions about your relationship with us.

NexTrend Securities strives to put customer needs first. We believe these rules help strengthen the relationship we have with our clients by facilitating more open and straightforward dialogue between you, your registered representative and our firm.

This website page is designed to provide you with information about your relationship with NexTrend Securities under Reg BI and Form CRS. You will find our Form CRS, Reg BI disclosures and additional information about these requirements. Please see Investor.gov/CRS and Regulation Best Interest for additional information.