Comments have been flooding into the Securities and Exchange Commission regarding the agency’s March 1 request for input on the costs and benefits of putting brokers under a fiduciary mandate.

The comment period expires in July.

Kent Mason, a partner with Davis & Harman inWashington, said in his mid-April comment letter that the SEC and the Department of Labor’s failure to collaborate on their “overlapping” fiduciary rules regarding advice to IRA owners will render the SEC’s current cost-benefit analysis worthless.

Mason, whose firm represents the companies that participated in the Oliver Wyman study on IRAs released to the DOL and the SEC last April, told the SEC that its public comment request includes “a fundamental omission.”

“The DOL project will address, among other things, exactly what the SEC is examining, i.e., the standards of conduct and other obligations of broker-dealers ‘when providing personalized investment advice about securities to retail customers’ who are IRA owners,” Mason told the SEC in his comment letter. “Because it is not possible to determine the effects of possible SEC reforms without taking into account the interaction with possible DOL reforms significantly affecting the same conduct and the same IRA market, the responses to the SEC request will virtually all be incorrect as soon as the DOL acts, thus rendering the SEC’s administrative record unhelpful.”

Mason also wrote that there is “complete overlap” between the SEC and DOL fiduciary projects with respect to investment services provided to IRA owners.

“Since IRA assets were approximately $4.9 trillion as of the end of 2011, the degree of overlap between the two projects is enormous,” Mason said.

However, David Tittsworth, executive director of the Investment Adviser Association in Washington, countered that “the DOL fiduciary rulemaking and the SEC’s pending request for information stem from two different laws.”

While the subject matter is related, Tittsworth said, “the provisions of ERISA generally governing the conduct of fiduciaries of pension plans are separate and different from Section 913 of the Dodd-Frank Act, the provision of law that authorizes the SEC to issue rules relating to the standard of conduct for broker-dealers that provide investment advice to retail customers.”

While the industry has consistently urged the SEC and DOL to work together, Tittsworth added, “as a matter of strict statutory interpretation, the SEC and DOL are constrained by—and must follow—very different statutory mandates. In fact, the argument could be made that, had Congress intended the SEC and DOL to work together on fiduciary rulemakings, Congress could have done so.”

As Phyllis Borzi, head of DOL’s Employee Benefits Security Administration and chief architect of the fiduciary rule, has told Investment Advisor previously, while there is a “primary commonality” between the SEC’s Dodd-Frank project to craft a rule to put brokers under a fiduciary mandate and EBSA’s fiduciary project “to be more clear as to who is a fiduciary under [DOL and SEC’s] respective statutes,” it’s impossible for the two to come out with one fiduciary standard as the statutes they adhere to are “so very different.”

Indeed, Borzi told IA in a recent email exchange that EBSA’s ultimate goal with the re-release of its fiduciary proposal in July, “is to take everything we have learned [from the comments] and—acting in coordination with the SEC so that compliance with one regulatory regime doesn’t put you out of compliance with the other—issue a final rule that makes sense and protects the trillions of dollars in retirement savings that workers and families are counting on.”

But Mason maintained in his comment letter to the SEC that “retail customer confusion” will ensue under two different rules.

Mason argued that the SEC’s March 1 request for feedback regarding the costs and benefits of a fiduciary rule, which also asked about “retail customer confusion,” needs to be modified to address the following “core issue”:

Assume that a retail customer asks a broker-dealer for investment assistance with respect to a $30,000 non-retirement retail account and a $40,000 IRA account. The broker-dealer in this example could provide investment assistance with respect to the non-retirement account. However, under the original DOL-proposed regulation, as generally interpreted by the IRA community, a broker-dealer would have generally been prohibited from providing investment assistance with respect to an IRA (at least without a major restructuring of the broker-dealer industry).”

Thus, the broker-dealer would have to tell the customer that he is prohibited from providing investment assistance regarding the IRA account. Moreover, the customer would be required to agree that in investing the IRA assets on her own, the customer would not even consider anything the broker-dealer said regarding investing the non-retirement retail account.

Any normal retail customer would be bewildered by this arrangement.