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March 19, 2019 at 04:17 PM
House Financial Services Committee Chairwoman Maxine Waters, D-Calif., said Tuesday that the full committee would meet on March 26 to mark up the SEC Disclosure Effectiveness Testing Act, which was introduced during a subcommittee hearing to examine the securities regulator’s Regulation Best Interest.
The bill, HR 1815, was introduced by Rep. Sean Casten, D-Ill., during a hearing held by the committee’s Subcommittee on Investor Protection, Entrepreneurship and Capital Markets, and would require the Securities and Exchange Commission to conduct usability testing on the agency’s new disclosure forms before finalizing Reg BI, a plan that the subcommittee’s chairwoman, Rep. Carolyn Maloney, D-N.Y., said “is an excellent idea.”
Casten stated during the hearing that while he was pleased that the SEC engaged in investor-usability testing on the proposed Customer Relationship Summary disclosure form, or Form CRS, which is part of the SEC’s three-pronged advice standards package, he’s “concerned that they over-relied on surveys as opposed to in-depth interviews.”
During a March 14 hearing on Reg BI, Maloney stated that while the rule “may be an improvement on the status quo, it is still far too weak,” and that she still has serious concerns with it.
The first fault Maloney sees is that Reg BI does not subject brokers to a “full fiduciary duty,” like the Labor Department’s now-defunct fudiciary rule would have required. “Instead, the SEC’s rule says that brokers who provide advice to retail customers have to act in the ‘best interest’ of the customer — but refuses to define ‘best interest.’”
