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April 28, 2014 at 08:00 AM
After declaring that 2014 will be the year the Securities and Exchange Commission decides whether to move ahead with a rule to put brokers under a fiduciary mandate, Mary Jo White directed SEC staff to compile a list of “all of the potential options” available to the agency that could be used in drafting a fiduciary rule.
Why? “If the decision were made to impose a uniform fiduciary duty, there are a number of ways to do that,” White told IA in an exclusive interview in mid-April.
White announced in a late March speech that “in order to more fully inform the commission’s decision on this matter,” she had directed SEC staff to compile the list, “including a uniform fiduciary standard for broker-dealers and investment advisors when dealing with retail customers, and other measures that may be more targeted and achievable in the shorter term.”
As it stands now, White told IA that she has gotten “some initial recommendations and analysis from the staff,” to which she has “raised some questions and given some reactions. I’m actively in discussions with the staff on those recommendations and analysis.”
The priority, she continued, “is to get those [staff] recommendations before the commission on what I consider to be a very high priority issue for investors.”
White decides what those recommendations should be, and then the five-member commission considers them.
In her mid-April talk with IA, White said that she’s “driving this [fiduciary] issue because of how important that I think it certainly is.” But she stressed, it’s a “complex” issue. “It’s hard.”
White declined to give a formal deadline on when the agency would decide whether to move forward on a fiduciary rulemaking, stating only that deciding whether to reform the advice regulations governing brokers and advisors “is a priority for 2014.”
When asked by IA if she believes that investors do not understand the difference between a broker and an advisor, White replied: “I think the data certainly shows that, that there is that investor confusion.”
Another “very important aspect” of deciding whether to use its authority under Section 913 of Dodd-Frank is for the commission to determine whether to harmonize the rules for brokers and advisors, which White said would be a separate rule to any fiduciary rulemaking.
