The Securities and Exchange Commission voted 4-1 on Wednesday to pass the agency’s standard of conduct, aka fiduciary, rulemaking package, with SEC Commissioner Kara Stein casting the dissenting vote.
The proposal will go out for a 90-day comment period.
“This was truly a Herculean task done in a very short period of time,” said Stein, a Democrat, noting that the proposal is more than 1,000 pages long.
Stein stated that the proposal “fails to provide comprehensive reform,” adding that “the emperor has no clothes” in establishing a fiduciary duty for brokers by instituting the proposal, called Regulation Best Interest.
“For at least the last decade, investors have been asking for a fiduciary standard for brokers; unfortunately [the proposal] squandered the opportunity for us to act in the best interest of investors,” Stein said.
The proposed regulation, Stein said, “reaffirms that broker-dealers have to meet their suitability obligations” and merely “requires and mandates a few disclosures.”
Stein added: “Because there is no definition of best-interest standard, the name [of the new rule] is confusing. It’s more appropriate to call this Regulation Status Quo.”
SEC Commissioner Hester Pierce, a Republican, countered Stein’s assertion, saying the emperor “will wear more clothes” under the new standard.