(Bloomberg) — An Obama Administration official’s call for tough rules on brokers is “propaganda” that ignores stiff oversight of the industry by market regulators, a Securities and Exchange Commission member said Friday.
SEC Commissioner Daniel Gallagher blasted a recent memo by White House advisers that said abusive trading practices cost workers billions of dollars in retirement savings. The document favors a Labor Department plan to require brokers to act in the customer’s best interest, even when that limits commissions or fees.
The remarks by Gallagher, a Republican, underscore how politically divisive the expected Labor Department proposal on retirement accounts will be. Wall Street trade groups have said they plan to lobby furiously against it because it could cut off their ability to serve smaller accounts.
“The White House memo is thinly-veiled propaganda designed to generate support for a widely unpopular rulemaking,” Gallagher said at the annual SEC Speaks conference in Washington.
Costs investors billions
The White House memo, obtained last month by Bloomberg News, said abusive trading practices cost investors $8 billion to $17 billion a year. It was drafted by Jason Furman, the chairman of President Barack Obama’s Council of Economic Advisers, and circulated to senior aides.
Gallagher said mishandling customer accounts is already disallowed under current regulations. The memo “blatantly ignores this comprehensive regulatory oversight,” he said.