SEC Commissioner Kara Stein.

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.

While Peirce said she also had concerns about the proposals, she sees them as an “excellent start” to reform.

SEC Commissioner Michael Piwowar, a Republican, stated that the Regulation Best Interest proposal “is a solid building block,” as “it imposes a new best-interest standard.”

While he noted that he has “some misgivings about the three proposals,” Piwowar said that he supported putting them out for comment. “No longer can people say the SEC needs to do something about this” fiduciary issue.

Piwowar said that he wanted to hear comments on whether Regulation Best Interest “will raise compliance costs” for broker-dealers. “Despite these concerns, I’m supporting this proposal.”

SEC Commissioner Robert Jackson, a Democrat, stated that he was “reluctantly” supporting the proposals but could not support them as written “today as final agency rules.”

The “need for SEC action has been even more urgent,” Jackson said, since the Labor Department’s fiduciary rule has been stymied by the current administration.

SEC Chairman Jay Clayton said in his final statements before the vote that his “colleagues raise very important points” that address “the complexities that we face as we move forward.”

— Check out SEC Meets to Vote on Fiduciary Proposal on ThinkAdvisor.