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June 27, 2011 at 09:22 AM
A senior official at the Securities and Exchange Commission (SEC) said Monday that while he believed the securities regulator would issue a rule putting brokers under a fiduciary mandate this year, the agency would hold off on issuing one on the overall harmonization of advisor and broker rules.
Dougl
as Scheidt, associate director and chief counsel in the SEC’s Office of Investment Management, said during a panel discussion at the Insured Retirement Institute’s (IRI) regulatory conference in Washington, that while it is indeed likely that the SEC will act on the recommendations it put forth in its fiduciary study, which was mandated by Dodd-Frank, the devil will be in the details as to how such a proposed rule is crafted.
Crafting a fiduciary duty rule for brokers is a “thorny issue,” Scheidt said. While some broker-dealers have said they “fully support” a uniform fiduciary standard for advisors and brokers, these same BDs have also said that “we will fight you to death on what it actually means.”
Scheidt said that harmonization of advisor and broker rules, which refers to requiring brokers and advisors to have the same licensing standards, capital and educational requirements, and supervisory structure, “all pose a lot of difficult issues that perhaps over time will be worked out.” His mantra, he said, “is to not impose harmonization for harmonization sake.”
Scheidt’s comments come only days after the Financial Planning Coalition sent a letter to the SEC, which was accompanied by a petition signed by more than 5,200 financial planners, urging the SEC to apply a fiduciary standard to anyone providing personalized investment advice to retail clients. The Coalition is comprised of the Financial Planning Association (FPA), the National Association of Personal Financial Advisors (NAPFA), and the Certified Financial Planner Board of Standards (CFP Board).
SEC Chairman Mary Schapiro (left) has said the Commission will focus in July on the fiduciary duty issue as well as 12b-1 reform. Scheidt stopped short of saying the SEC would issue a rule on 12b-1 reform by year-end. However, he said because the proposed changes to Rule 12b-1 “affects people’s pocket books,” there have been numerous “strong reactions” to the SEC’s proposal.
