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Regulation and Compliance > Federal Regulation > SEC

SEC Jumps Into Fiduciary Rule Fray, Seeking Comments on ‘Future Action’

By Melanie Waddell

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Securities and Exchange Commission Chairman Jay Clayton said Thursday that the agency is seeking comment on a laundry list of issues to inform “possible future actions” by the agency on a fiduciary duty rulemaking.

Noting Labor Secretary R. Alexander Acosta’s recent announcement that Labor’s June 9 compliance date will move forward, Clayton said that the rule “may have significant effects on retail investors and entities regulated by the SEC,” as well as “broader effects on our capital markets. Many of these matters fall within the SEC’s mission of protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital formation.”

Clayton said that he welcomes Labor’s “invitation to engage constructively as the Commission moves forward with its examination of the standards of conduct applicable to investment advisers and broker-dealers, and related matters.”

Added Clayton: “Given the significance of these issues — in particular, for retail investors looking to save for the things that matter most to them, including homeownership, education, and retirement — I look forward to robust, substantive input that will advance and inform the SEC’s assessment of possible future actions.”

The SEC, Clayton said, “has been reviewing this [fiduciary] area for some time,” but significant developments in the marketplace have occurred since “the RAND study of investor perspectives was commissioned in 2006, the Dodd-Frank Act Section 913 staff study conducted in 2010-2011, and, most recently, a solicitation of data and other information in 2013.”

Clayton pointed to a webform and e-mail box that are now available “for members of the public to make their views on these issues known publicly in advance of any future Commission action.”

The comment period currently has no deadline, according to an SEC spokesperson.

Barbara Roper, director of investor protection for the Consumer Federation of America, said in response to the SEC request that CFA has “long supported SEC action to ensure that broker-dealers who provide personalized investment advice are held to the fiduciary standard appropriate to that role. And we appreciate that Chairman Clayton, like his four immediate predecessors, has pledged to address this issue.”

She added that while CFA looks forward “to working with the Commission to develop a strong, pro-consumer standard, experience has taught us to take these commitments with a grain of salt. It has also taught us to remain on our guard against efforts by the broker-dealer community to hijack this process to benefit themselves rather than their customers.”

Roper called it “troubling that Chairman Clayton frames his announcement as a response to DOL Secretary Acosta’s call for further input. Industry opponents of the DOL fiduciary rule have made no secret of their desire to replace the DOL fiduciary rule with a watered down, disclosure based approach from the SEC.”

The agency not setting a comment period deadline, Roper added, looks to be a “ploy to justify putting off the January 2018 [DOL fiduciary rule] implementation date indefinitely while they [DOL and the SEC] come up with a joint plan to water down the standard to the point of meaninglessness.”

The SEC, Roper continued, “has no jurisdiction or particular expertise with regard to fiduciary investment advice to plan sponsors or with regard to advice related to non-securities, such as insurance products, that play a major role in the retirement advice market. For these reasons, an SEC rule cannot substitute for the broader protections afforded retirement savers by a DOL rule under ERISA and the tax code.”

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