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September 05, 2014 at 08:06 AM
Securities and Exchange Commission Chairwoman Mary Jo White views moving forward on a uniform fiduciary rule for brokers and advisors as “a personal priority for her,” and she has exhibited the conviction to move ahead on similar controversial rulemakings — like money market and credit rating agency reforms — with a split 3-2 vote, says Barbara Roper, director of investor protection for the Consumer Federation of America.
During a Thursday conference call, Roper said that in her personal discussions with White regarding a uniform fiduciary rulemaking, White “gives every impression that this [rulemaking] is also a personal priority for her.”
The two Democratic commissioners, Luis Aguilar and Kara Stein, have “voiced their support for a strong uniform fiduciary standard,” Roper said during the call, held by the Institute for the Fiduciary Standard, while the two Republican commissioners, Daniel Gallagher and Michael Piwowar, have “questioned the need” for a fiduciary rulemaking.
While the division within the commission makes White’s decision to press ahead with a fiduciary rulemaking “more challenging,” Roper said, it could also be viewed “as liberating” if she does.
“If the Republican commissioners’ view is, and remains, ‘Just say no,’ the chair can and should view herself freed from having to negotiate to win their support by watering down the standards,” Roper said. “She’d have to have the courage to take a 3-2 vote in support of a fiduciary standard, [which] she showed with [the recent] 3-2 vote in support of strengthening credit rating agency rules.”
Moving forward on a fiduciary rule should not “be a partisan issue,” Roper continued. A fiduciary rulemaking is “important enough that a 3-2 vote would be justified if that’s what it takes to move forward.”
Roper argued that a fiduciary rule would fix the problem that the SEC created. “The problem, in its starkest terms, is that investors who are in the market for investment advice are being actively deceived, and SEC policy permits that deception,” Roper said.
Brokers and investment advisors “both call themselves advisors — they both offer investment planning and retirement planning that are or should be advisory in nature and they both market themselves as their primary service being investment advice,” she continued. “As a result, they are indistinguishable to the investing public. But brokers aren’t, in fact, advisors, at least not legally. They are salespeople” held to a suitability standard.
