The short answer
Regulation Best Interest is the SEC rule that requires a broker-dealer and its representatives to act in a retail customer's best interest when recommending any securities transaction or investment strategy, without putting their own financial interest ahead of the customer's. A DST interest is a security sold in a private placement, so a broker who recommends one for your exchange is bound by it. The rule is met through four component obligations, disclosure, care, conflict of interest and compliance, and the SEC says it cannot be satisfied through disclosure alone.
At a glance
| Rule | 17 CFR 240.15l-1, adopted under the Securities Exchange Act of 1934 |
|---|---|
| Compliance date | June 30, 2020 |
| Four obligations | Disclosure, care, conflict of interest and compliance |
| Companion document | Form CRS relationship summary, delivered no later than the first recommendation |
Reg BI comes from a 2019 SEC rulemaking and has bound broker-dealers since June 30, 2020.
The SEC adopted Regulation Best Interest in Release No. 34-86031. The rule took effect on September 10, 2019, and the release set a compliance date of June 30, 2020. The release says the standard draws from key principles underlying fiduciary obligations, including those of investment advisers, but the SEC declined to apply the Advisers Act fiduciary standard itself to broker-dealers.
The rule text at 17 CFR 240.15l-1 protects a retail customer: a natural person, or the legal representative of one, who receives a recommendation and uses it primarily for personal, family or household purposes. The duty attaches at the time the recommendation is made and covers account recommendations as well as individual securities.
A companion rule, 17 CFR 240.17a-14, requires every registered broker-dealer that serves retail investors to deliver Form CRS, a short relationship summary, before or at the earliest of a recommendation, an order or the opening of an account. The firm must also post its current Form CRS prominently on its website if it has one.
Four component obligations decide whether a DST recommendation complies.
Disclosure: before or at the time of the recommendation, the broker must give you in writing the material facts about the relationship, including that it is acting as a broker, the material fees and costs, the type and scope of services and any material limits on what it may recommend, plus all material facts about conflicts tied to the recommendation.
Care: the broker must understand the risks, rewards and costs of the product, have a reasonable basis to believe it could be in the best interest of at least some retail customers, and have a reasonable basis to believe it is in your best interest given your investment profile. A series of recommended transactions must also not be excessive when taken together.
Conflict of interest and compliance: the firm must keep written policies to identify and disclose or eliminate conflicts, mitigate conflicts that give its representatives an incentive to put their own interest first, and eliminate sales contests, quotas, bonuses and non-cash compensation based on sales of specific securities within a limited period. It must also keep written policies reasonably designed to achieve compliance with the whole regulation.
It bites when a commissioned recommendation meets a seller with a deadline.
Hypothetical: you hold $1,000,000 of exchange proceeds with 30 days left to identify, and a representative recommends three DSTs whose offerings pay selling commissions. The disclosure obligation puts those commissions and other material fees in writing before or at the recommendation; the care obligation requires a reasonable basis that these three trusts, at these costs, fit your profile. The release adds that weighing reasonably available alternatives does not require evaluating every possible product or naming one best product. Run your own numbers with your CPA.
Being an accredited investor does not take you outside the rule. The SEC declined suggestions to exclude high-net-worth natural persons, and it reads legal representative to mean non-professional representatives such as executors and holders of a power of attorney, while keeping trusts that represent a natural person's assets within the definition.
For the questions to put to a broker and how DST compensation is set, see advisor fees and conflicts for DSTs, who may sell a DST interest and DST fees and loads.
Related questions
Is Reg BI the same as a fiduciary duty?
No. The SEC said the standard draws from fiduciary principles but chose not to apply the Advisers Act fiduciary standard to broker-dealers. An investment adviser's duty comes from the Advisers Act instead.
When must I receive Form CRS?
Before or at the earliest of a recommendation of an account type, securities transaction or investment strategy, an order placed for you, or the opening of a brokerage account. An existing customer receives it again before a new account type, a rollover recommendation or a new service held outside an existing account.
Can a broker satisfy Reg BI just by disclosing its conflicts?
No. The adopting release states that the standard cannot be satisfied through disclosure alone. Conflicts that create incentives for representatives must be mitigated, and sales contests and quotas tied to specific securities must be eliminated.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.