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March 15, 2016 at 10:24 AM
Hester Peirce, a nominee to be a commissioner at the Securities and Exchange Commission, said Tuesday that she is “quite worried” that the Department of Labor failed to consider the agency’s input on its forthcoming rule to amend the definition of fiduciary on retirement advice, and that she fears the rule will “cut a whole segment of people” from access to advice.
Peirce, a Republican, along with SEC commissioner nominee Lisa Fairfax, a Democrat, faced congratulations – and sometimes heated questions — from members of the Senate Banking Committee during their confirmation hearing Tuesday.
Sen. Tim Scott, R-S.C., said during the hearing that he worries DOL’s rule to change the definition of fiduciary under the Employee Retirement Income Security Act “will make winners and losers of small investors.” He then asked Peirce and Fairfax their thoughts.
“I’m quite worried about DOL’s proposal because I’ve heard that the SEC’s input wasn’t considered,” Peirce responded.
“We need to understand how rules like this are going to impact everyday people,” she said, adding that if confirmed she would “want to see what work SEC and DOL had done” on the rulemaking.
“Protecting investors in this [retirement] space and protecting access to advice is also important,” added Fairfax, “particularly for low- and middle-income investors.”
Both Peirce and Fairfax agreed that economic analysis of rules as well as retrospective reviews of rules are important, with Peirce noting “equity market structure” rules that the commission has “built up” over many years needed to be reassessed.
As to the SEC’s “neither admit nor deny” policy for enforcement actions, Peirce said the SEC enforcement record “shows admission of guilt is infrequent,” and that “there’s a stronger message if there’s an admission of wrongdoing.” She noted that “repeat offenders is a case where it is worth it [for the SEC] to take the extra resources to get an admission of wrongdoing.”
She added also that the SEC needs more expertise in the fixed income area and that the SEC should examine how it can “shore up” its oversight of the Financial Industry Regulatory Authority.
Sens. Chuck Schumer, D-N.Y., and Bob Menendez, D-N.J., grilled both women on whether they believed the Commission should take up a petition for rulemaking before the agency on corporate political spending.
