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June 14, 2016 at 10:55 AM
A uniform fiduciary rule by the Securities and Exchange Commission will not be released before the end of the Obama administration, but the agency will watch the unfolding of the Department of Labor’s fiduciary rule to see if a “conflict develops,” SEC Chairwoman Mary Jo White told Senate lawmakers on Tuesday.
During the hearing held by the Senate Banking Committee on oversight of the SEC, White also said that the House Appropriations Committee’s recent SEC budget approval, which was more than $200 million less than Obama requested for FY2017, will “imperil the progress” the agency has made and its ability to fulfill its mission.
When asked by Sen. Jon Tester, D-Mont., if a fiduciary rule would “get done” before the end of the Obama administration, White responded: “I’m committed to moving it [a fiduciary rule] as fast and as well as I can, but I can’t give you that commitment; it’s a longer route than that.”
Sen. Elizabeth Warren, D-Mass., also took White to task over the SEC’s “disclosure effectiveness initiative,” which Warren said has moved the agency in the opposite direction of protecting investors.
“Instead of moving forward on issues intended to help investors, you’ve actually headed in the opposite direction. Since your first year in office, you’ve dedicated significant time and resources to a project you invented and called the ‘disclosure effectiveness initiative.’”
“Your big idea” according to a 2013 speech, Warren continued, “is that companies may be disclosing too much information, causing investors to suffer from something you call ‘information overload.’”
Continued Warren: “I’m all for eliminating redundant disclosures, but I have not heard of the concept of information overload in the context of investing in stocks. I’ve never heard of the idea that investors want less information than they’re getting.”
The purpose of disclosure effectiveness was a response to a Congressional mandate, White responded, under the JOBS Act. “For decades at the SEC, we’ve been undergoing disclosure effectiveness review.”
What evidence do you have of “investor overload?” Warren asked.
White shot back: “The SEC review is meant to make disclosure more meaningful to investors. We’ve also gotten comments about not objecting to removing things that are repetitive.”
Tester then probed White on whether the SEC would enforce DOL’s fiduciary rule. “We do not enforce the DOL rule,” White responded. “DOL will enforce the rule” for advisors and brokers.
Tester noted that oversight of advisors and brokers has been the SEC’s turf, so “how is this [DOL oversight] going to work?”
White responded that the SEC and DOL are “independent agencies [with] independent rules; we’ve had rules before that overlap. We will watch this [DOL rule] and if issues arise we will coordinate [with DOL] if a conflict develops.”
