Dodd-Frank: SEC Issues Call for Comments

The U.S. Securities and Exchange (SEC) has set up a Dodd-Frank Wall Street Reform and Consumer Protection Act comment submission process.

The SEC has posted a list of Dodd-Frank act comment submission form links, and it also has posted a separate request for comment on the standard of care that brokers, dealers and investment advisors should use.

The submission form list includes separate Web forms for many different Dodd-Frank act sections, including the family office provision in Title IV, and the Office of the Investor Advocate, credit rating rating agency review and investment advisor examinations study provisions in Title IX. The rules with the tightest implementation schedules are at the top of the list, officials say. Commenters can use the same list to submit comments through e-mail, and they also can submit comments through traditional mail.

The standard-of-care request for comment relates to a study to evaluate: the effectiveness of existing standards of care advisors and broker-dealers use “when providing personalized investment advice and recommendations about securities to retail investors; and whether there are gaps, shortcomings, or overlaps in legal or regulatory standards in the protection of retail customers relating to the standards of care for these intermediaries,” officials say.

Traditionally, advisors have used a fiduciary standard, which requires them to put clients’ interests ahead of their own, and broker-dealers — including life insurance agents affiliated with broker-dealers — have used a suitability standard, which requires them to verify that the products sold to consumers meet the needs of those consumers.

In the request for comment, the SEC asks commenters to describe specific instances in which “the regulation and oversight of investment [advisors] provide greater protection to retail customers than the regulation and oversight of brokers and dealers; and the regulation and oversight of brokers and dealers provide greater protection to retail customers than the regulation and oversight of investment [advisors].”

The SEC also asks commenters to discuss “the existing legal or regulatory standards of state securities regulators and other regulators intended to protect retail customers” and the impact of subjecting brokers and dealers to the Investment Advisers Act of 1940 on brokers, dealers and affiliated persons.

Comments on the fiduciary standard issue will be due 30 days after the request appears in the Federal Register.

The SEC plans to hold public hearings on selected topics, officials say.

President Obama signed H.R. 4173, the bill that created the Dodd-Frank act, Wednesday. Agencies usually wait until they draft regulations to ask for comments, but the SEC says it is giving the public a chance to comment while drafting is under way because of the significance of the rulemaking envisioned.

The SEC has come up with detailed rules for in-person encounters. Staffers will “try to meet with any interested parties seeking a meeting,” officials say.

“When the number of requests exceeds availability, the staff will seek out parties with varying viewpoints,” officials say. “Staff may have to limit the number of meetings with similarly situated parties and will limit multiple meetings with the same party…. Staff will ask those who request meetings to provide, prior to the meeting, an agenda of intended topics for discussion. After the meeting, the agenda will become part of the public record. Meeting participants will be encouraged to submit written comments to the public file, so that all interested parties have the opportunity to review and consider the views expressed.”

One question has been whether federal agencies will use DFWSRCPA, WSRCPA, WSR, or some other acronym to refer to the act. The SEC did not use an acronym when referring to the act in the documents that came out today.