If confirmed by the Senate, the two new commissioners at the Securities and Exchange Commission, Hester Peirce and Lisa Fairfax, will be instrumental in helping the agency determine the outcome of a potential uniform fiduciary rule for brokers and advisors as well as whether the agency will require advisors to receive a third-party audit.
Peirce noted during her testimony in mid-March at the Senate Banking Committee confirmation hearing 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 Lisa Fairfax, a Democrat, faced congratulations — and sometimes heated questions — from members of the committee during their confirmation hearing.
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 loser 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 that the “equity market structure” rules that the commission has “built up” over many years need to be reassessed.
Views on Admissions of Guilt; Corporate Political Spending
As to the SEC’s “neither admit nor deny” policy when it comes to enforcement actions, Peirce said, “There’s a stronger message if there’s an admission of wrongdoing,” adding 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 that the SEC needs more expertise in the fixed-income area.