uphold the authentic fiduciary standard in new legislation. This editor is a member of the Committee.
SEC Commissioner Elisse B. Walter and SEC Commissioner Luis A. Aguilar held meetings with members of the Committee for the Fiduciary Standard at the SEC’s offices in Washington DC on July 29. The Committee also briefed Congressional staffers and a Treasury official.
The officials asked the Committee to discuss how the five core principles would apply in differing circumstances and to explore the stark differences between the authentic fiduciary standard and a lower, “commercial” or “arm’s length” standard.
The five core principles are:
? Put the client’s best interests first;
? Act with prudence; that is, with the skill, care, diligence and good judgment of a professional;
? Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts;
? Avoid conflicts of interest; and
? Fully disclose and fairly manage, in the client’s favor, unavoidable conflicts.
Harold Evensky, a Committee member who attended the Washington meetings, and president of Evensky & Katz, a registered investment adviser, noted that, “We felt strong interest from everyone we met. Although no specific commitments were made, our takeaway was that all participants understand and believe in the application of the five core fiduciary principles to any and all who provide (or purport to provide) investment advice.”
Since announcing the five core fiduciary principles and calling on Congress to adopt the authentic fiduciary standard on June 29th, the Committee for the Fiduciary Standard has:
- Urged investors, professionals and all interested market participants to ‘vote’ in support of the five core fiduciary principles by signing the Committee’s online petition
- Invited two leading securities attorneys to debate how Congress can best put investors’ interests first. (The invitation was declined.)
- Met with staff members of the House of Representatives Committee on Education and Labor to provide assistance on HR 2989, a Bill intended to introduce a fiduciary and fee disclosure requirements for those who give advice to retirement plan participants.
- Met with SEC Commissioners Walter and Aguilar
- Met with Congressional staffers and a Treasury official
“We saw Washington at its very best. The keen sense of the vital role of the fiduciary standard, and the historic opportunity to ‘do what’s right for investors’ were palpable in our meetings,” according to Knut A. Rostad, Chair of the Committee and the Regulatory and Compliance Officer at registered investment adviser Rembert Pendleton Jackson.
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The SEC and Treasury Department are continuing their work on re-regulation of financial services. One important leg of the re-regulation proposed in the Obama administration’s white paper, sent to Congress on June 17th, is the mandate that the SEC be empowered to “Establish a fiduciary duty for broker-dealers offering investment advice and harmonize the regulation of investment advisers and broker-dealers.”