While financial deregulation has been a pillar of President Donald Trump’s agenda, broker-dealers and advisors are bracing for a new set of advice-standards regulations from Trump-nominated SEC Chairman Jay Clayton.
Not long after being installed in the Oval Office, Trump directed the Labor Department to review its fiduciary rule and prepare an updated analysis of the “likely impact” of its rule on access to retirement information and financial advice; Labor’s rule would eventually be killed by the U.S. Court of Appeals for the 5th Circuit in June 2018.
Since early 2017, Clayton has put the SEC at the helm of the fiduciary tiller. Beleaguered Labor Secretary Alexander Acosta, another Trump appointee, has remained mum on Labor’s next fiduciary move — the only guidepost being Labor’s fall 2018 reg agenda, which said the department plans to issue a revised final fiduciary rule package this fall.
Industry officials, however, doubt a full-blown fiduciary rule is in Labor’s future. After the final SEC Regulation Best Interest is issued, “There probably isn’t much of a chance that the DOL will propose a new regulation expanding the definition of fiduciary advice, even after the SEC rule is finalized,” said Fred Reish, a partner at Drinker Biddle & Reath.
In Congress, Sen. Elizabeth Warren’s presidential campaign isn’t dampening her penchant for scrutinizing financial regulators. The Massachusetts Democrat, well-known for her consumer-first prowess, hasn’t slowed down in keeping the heat on regulators since making last year’s IA25 list.
After numerous calls for Wells Fargo CEO Tim Sloan to be fired, Warren got her wish in late March when Sloan announced he’d step down. Warren’s response in a tweet: “About damn time.”
Taking SEC Chairman Jay Clayton to task in December over the agency’s Reg BI, Warren argued that the securities regulator should “move away from a disclosure-based approach in your final rule and just adopt a uniform fiduciary standard for both advisors and brokers” as Congress instructed in Section 913 of Dodd-Frank.
Also in late March, Warren sent a letter to FINRA CEO Robert Cook demanding that any revamped broker expungement rules end up being tougher, as broker expungements “are often associated with broker misconduct” and recidivism.
Just in time for tax day, Warren introduced the Tax Filing Simplification Act to ease tax filing for American taxpayers by letting them “simply sign and return a pre-filled tax form, and require the IRS to create a free online tax preparation and filing service,” she said on Twitter.