While heavyweights like Vanguard founder John Bogle and former Securities and Exchange Commission (SEC) Chairman Arthur Levitt plan to press SEC Chairwoman Mary Schapiro at a meeting Tuesday to move forward in proposing a fiduciary rule for brokers, industry experts said Wednesday that those efforts will likely prove futile.
A fiduciary rulemaking at SEC “appears to be stalled with little to no signs that the agency appears to go forward with the issue that Schapiro once said was a priority,” Barbara Roper (left), director of investor protection at the Consumer Federation of America (CFA), told reporters on a Wednesday conference call.
The call was held as part of “Fiduciary September,” as the Institute for the Fiduciary Standard has christened this month. Roper said the cost-benefit analysis that the SEC has been pressed to perform on a fiduciary rule has “paralyzed” the agency.
And threats of potential litigation over the rule have caused Schapiro to slow down. “Because of the threat of litigation, [Schapiro] is now reluctant to move forward” on a fiduciary proposal without support from a Republican commissioner, Roper said.
What’s more, the SEC is faced with mandatory rulemaking obligations under the Dodd-Frank Act, and now, more recently, under the JOBS Act, Roper said, so the SEC will “prioritize” its rulemakings. Dodd-Frank only gave the agency the authority to write a fiduciary rule; it didn’t mandate one.
Roper was joined on the call by Knut Rostad, president of the Institute for the Fiduciary Standard, and Ron Rhoades, assistant professor and chairman of the financial planning program at Alfred State College.
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