A fiduciary rulemaking by the Securities and Exchange Commission would not “stave off” the planned upcoming release of a fiduciary redraft by the Department of Labor, SEC Commissioner Daniel Gallagher said Tuesday.
“I don’t necessarily feel that people should take solace in an SEC rulemaking to stave off a DOL rule,” Gallagher said during a one-on-one discussion with Richard Ketchum, CEO of the Financial Industry Regulatory Authority, during the self-regulator’s annual conference in Washington.
The rerelease of a DOL rule proposal to amend the definition of fiduciary under the Employee Retirement Income Security Act is “a very real issue, and we have to take it into account,” he said.
The SEC is “getting called out by all sectors” for moving slowly on a fiduciary rulemaking, Gallagher continued, “but it’s the best of what the SEC does: acting deliberately.”
Said Gallagher: “Some folks have come to us and said do a rulemaking because it will stave off Labor. I don’t like rulemaking to stave off other people; [An SEC fiduciary rule has] to make sense based on the merits. And I’m not convinced that [an SEC proposal] would” stop the DOL from reissuing a rule proposal.
DOL is “going to do what they do,” and DOL is “dealing with different issues and a very different statutory construct” under ERISA, Gallagher said. Plus, he said, Section 913 of the Dodd-Frank Act is “very limited” in the authority it gives. “It is important that our staffs are working closely together [on the fiduciary rulemaking], and they are.”
While SEC Chairwoman Mary Jo White has said the commission would decide this year whether to move forward on a fiduciary rule, Gallagher said that “in many languages, 2014 can mean never.”
Gallagher, a Republican, who reiterated that he has yet to be convinced that an SEC fiduciary rulemaking is needed, also noted that he wasn’t sure whether DOL would stick to its planned August redraft release.