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.”