This is hopefully my last chance to write about what might in the SEC report on a fiduciary standard for brokers, which is due to be delivered to Congress on Friday. For this parting shot, I tried to get as much of an insider’s perspective as I could, calling Kristina Fausti, who’s now head of government affairs at the fiduciary education and information firm fi360 in Pittsburgh. But until last year, she was a staff attorney at the SEC in the mutual funds regulation section, and as you might imagine, still maintains so contacts at the Commission.

As usual, Kristina didn’t disappoint, offering an educated insight into what the SEC might do. “To me, a good indicator of what the Commission will do on a broker fiduciary standard is what they did two years ago when they extended the principal trading rule,” she said. “Their standard was disclosure: they allowed dually licensed to make principal trades, with disclosures of any conflicts of interest. I suspect they’ll apply the same kind of standard to a fiduciary duty.”

As a former Washington insider herself, Kristina went on to point out how quickly things can change “inside the Beltway.” In this case, two major events have rocked the SEC’s world since they were asked by Congress under Dodd-Frank to study the re-regulation of brokers: the Republicans took over the House of Representatives, and the SEC failed to get the additional funding they had been expecting.

For Kristina, this means that not only has the SEC lost much of its ability to take on any new regulatory initiatives, but the political will to re-regulate brokers largely dried up as well. That means the funding to do so will likely not be forthcoming any time soon. That makes the SEC more likely to look to FINRA for help with any new fiduciary regulations, and even more likely to give them a disclosure standard with which to work.

Will the word “fiduciary” even appear in the SEC’s recommendations? “That’s the big question,” she laughs. “After all her rhetoric about the need for a fiduciary standard, it’s hard to see how Chairman Schapiro could leave it out.”

But leaving “fiduciary” in and then mandating its compliance through disclosures would be unlike any of the current fiduciary standards for investment advisors, trust advisors or pension plan advisors. To my mind, it might not even meet the legal definition of a fiduciary.

If that’s how it comes down from the SEC, I predict we’ll see a legal challenge from the proponents of a genuine fiduciary duty, including some advisory groups whose members will have to compete against brokers with this pseudo-fiduciary duty.