The finance industry may get a fresh opportunity to chip away at an Obama-era rule that cracked down on Wall Street conflicts of interest, as the Securities and Exchange Commission is considering reviewing the responsibilities that brokers have to their clients.
The SEC’s first step could be seeking feedback on what’s known as a fiduciary duty — the requirement that financial professionals offering investment advice put their customers’ interests ahead of their own, said two people with knowledge of the matter who asked not to be named because the agency hasn’t announced its plans.
The SEC’s efforts would be significant in deciding the fate of a rule passed last year by the Labor Department that imposed a fiduciary obligation on brokers who handle retirement accounts. Despite Trump administration efforts to slow it down, Labor Secretary Alexander Acosta disappointed financial firms this week by saying the bulk of the rule would take effect as scheduled on June 9.
SEC spokeswoman Judith Burns declined to comment.
The Labor Department regulation was controversial from the start. Obama administration officials contended it was needed to eliminate biased financial advice that costs consumers billions of dollars annually in high fees and commissions.
But the finance industry countered that it would prompt firms to drop clients with small amounts of savings and limit customers’ investment options. Wall Street has long urged the SEC to take up the issue, with some finance executives anticipating that any regulation the agency passes would apply to a broader swath of investment accounts and be less onerous than the Labor Department rule.
Donald Trump set his sights on the fiduciary rule just weeks into his presidency by signing a February executive order that led to a 60-day delay of its implementation. While the industry hoped Trump’s action would lead to a further halt, or even a scrapping of the regulation, Acosta said on May 22 that his department had no “principled legal basis” to postpone it.