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FINRA Ready to Provide ‘Technical’ Aid on Fiduciary Rule, Legal Chief Says

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The Financial Industry Regulatory Authority stands ready to provide “technical assistance” to the Labor Department and the Securities and Exchange Commission as the two agencies coordinate a fiduciary rulemaking, said Robert Colby, FINRA’s chief legal officer.

Speaking on a panel at the National Society of Compliance Professionals national conference in Washington Monday, Colby said that FINRA “would love to see a best-interest standard applied that was similarly applied across the broker-dealer world.”

FINRA “commented” on Labor’s rule that the commission was the right agency to craft a fiduciary standard, Colby said. FINRA “still thinks that. You don’t get a lot of second opportunities in Washington, but the SEC has a second chance to come up with its own rule and work with the DOL to get to a coordinated standard.”

So FINRA is “standing ready to provide any sort of technical assistance … we have a very good working relationship with DOL; we talk to them fairly often and with the SEC, too.”

Colby added that if a “real best-interest standard that applied to broker-dealers” is promulgated, FINRA “would want the chance to go back and look at our rulebook, to see if the rules that we currently have that are intended to address specific conflicts needed to be done the exact same way.”

When asked by panel moderator Norm Ashkenas, senior vice president and chief compliance officer of Fidelity Brokerage Services, if Labor is receptive to “technical” assistance from FINRA, Colby responded. “It’s been a very wide-ranging reception. I think they’re trying to figure out how to make their rule work. They’re talking to SEC, talking to us.”

Ashkenas then asked panel members about the state fiduciary rules in play.

John Polise, associate director of Broker-Dealer and Exchange Oversight in the SEC’s Office of Compliance Inspections and Examinations, stated that “we need to get a full commission when dealing with a long-ranging policy,” like a fiduciary rulemaking, in order to get any traction. “I think something’s going to happen, but we need a critical mass to make those decisions.”

The Senate Banking Committee will hold a hearing Tuesday for Hester Peirce and Robert Jackson, the two nominees for open SEC commissioner slots.

Susan Axelrod, executive vice president of Regulatory Operations at FINRA, who also spoke on the panel, added that Labor’s rule and other fiduciary standards are “not unlike other areas where you may see disparate regulatory requirements — cybersecurity is a good example of that as well … It’s critically important for the regulators to continue to coordinate and not set different standards because it becomes challenging for the industry to comply.” 


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