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Regulation and Compliance > Federal Regulation > SEC

SIFMA Sees SEC Fiduciary Rule Proposal Within 18 Months

By Bernice Napach

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SIFMA officials are optimistic the SEC will develop its own fiduciary rule proposal during the 18 months that full implementation of the Labor Department’s existing rule has been delayed.

“I think they can get it down if they want to,” said SIFMA President and CEO Ken Bentsen, at a press conference in New York, about the state of the financial services industry.

(Related: DOL Ready to Enforce Fiduciary Rule: Acosta)

“I think they’re committed to doing this,” added Bentsen, recalling conversations he’s had with SEC Chairman Jay Clayton and Labor Secretary Alexander Acosta and public statements by the two officials. “That is different than in the prior administration where the commission felt they had to stand aside. 

“We take the chairman at his word that this is one of his top priorities to get this done … that the conversation between the commission and the Department of Labor has been substantive, that they recognize that there has to be much more interaction, interoperability among any standards and that multiple standards unnecessarily is not a good outcome.”

In the meantime Bentsen said SIFMA lawyers anticipate a ruling from the appellate court about a lawsuit opposing the Labor fiduciary rule on the grounds that the department overreached and the SEC is the agency with jurisdiction to develop a uniform fiduciary standard. SIFMA is one of multiple plaintiffs in the lawsuit, who lost the first round in a decision by the U.S. District Court in Texas, then appealed.

“We’re eager to hear what appellate court has to say. We believe strongly in our case — the government overreached in a number of areas.”

Bentsen said the SEC’s plan to propose a fiduciary rule is “all the more reason for court to settle their view on this so regulators know what direction to move in. Whether we prevail in our case — which we hope we do — or not, at the end of the day the course of action is the same, where SEC is to take lead and develop a best interest standard.”

The fiduciary rule is one of several priorities for SIFMA in the coming year. Others include regulatory review by the U.S. Treasury Department, cybersecurity and tax reform, according to Bentsen and Lisa Kidd Hunt, the 2018 chair of SIMFA’s Board of Directors.

SIFMA supports the corporate tax cuts included in the House and Senate tax bills as well as changes in the treatment of foreign-earned income — both bringing the U.S. more in line with taxation of other countries — but it is concerned about a House proposal to eliminate private activity bonds and advanced refunding in the municipal bond market and the Senate’s FIFO proposal — first in first out — which would be “the first time in the history of the U.S. tax structure … to forcefully tell individual investors which securities they can sell.”

“We’re hopeful that the conference committee will see their way to taking that section out,” said Bentsen, adding he feels “quite confident there will be a tax bill though there still is a lot of work to do.”

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