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DOL Fiduciary News: March 29, 2018

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SEC Rulemaking Fraught With Dangers for Consumers, Says Fiduciary Institute

Financial Advisor; March 28, 2018

The Institute for the Fiduciary Standard is warning that the Securities and Exchange Commission’s promise of fiduciary rulemaking could be a dangerous proposition for consumers.

In its first-quarter report on the status of fiduciary standards for the brokerage industry, the Institute said SEC fiduciary rule making would cause troubles for consumers if it results in the SEC watering down the existing fiduciary standard instead of improving investor protections. Currently only investment advisors and not brokers are governed by the regulation requiring advisors to put their clients’ interests before their own.

If the Securities and Exchange Commission doesn’t come up with a rule that goes beyond just the disclosure of conflicts of interest, state regulators and consumers may need to take front and center stage in the debate, the Institute said in its report.

“Bottom line, SEC rulemaking will come with big risks,” the Institute said. “The chief risk is that enhanced disclosures are branded as fiduciary duties. Investment advice is a confidential and intimate relationship of trust and confidence. In this case, investors would be better served with no new rulemaking, but by a faithful enforcement of the Advisers Act of 1940. The Institute is pressing our view with the Commission. Our next meetings are on April 5th,” the group said. 

SEC pledges quick delivery on fiduciary standard, but some have doubts

BenefitsPRO | March 28, 2018 at 05:36 PM

As industry waits for the Labor Department to determine if it will continue defending its fiduciary rule in the 5th Circuit Court of Appeals or before the Supreme Court, all eyes are on the Securities and Exchange Commission.

Days after the 5th Circuit issued a ruling vacating the fiduciary rule, SEC chairman Jay Clayton said the decision will have no effect on that agency’s intention to create a uniform fiduciary standard for all investment accounts.

“As far as I’m concerned, we’re moving forward,” Chair Clayton told attendees at the Securities Industry and Financial Markets Association’s annual compliance summit, according to reporting in ThinkAdvisor, a partner site to BenefitsPRO.

Asked when the SEC can be expected to release a proposed rule, chair Clayton said, “The sooner the better. I’m not sitting on this.”

Despite that pledge from the financial industry’s top cop, some sources have suggested the regulatory process is slowing at SEC.

Louis Harvey, CEO of Dalbar Inc., which provides compliance support throughout the financial services industry, has doubts the SEC can promulgate and implement a rule quickly.

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