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July 24, 2018 at 01:27 PM
Elad Roisman, the Senate Banking Committee’s chief counsel, who was nominated on June 4 to serve on the Securities and Exchange Commission, told lawmakers Tuesday during his nomination hearing that it was “important for the agency to act” in proposing its Regulation Best Interest for brokers, and he encouraged the public to comment on the entire advice package.
During his nomination hearing before the Senate Banking Committee, Roisman — who was nominated to replace Commissioner Michael Piwowar, a Republican, who left his post on July 7 — was questioned about the agency’s advice standards package.
“It’s important for the public to comment … Do people think that the current differentiation of standards [between brokers and advisors] is appropriate? This is one where the SEC needs to look at the comment file and meet with people and see what they got right and what could be improved. It’s a good first step, but I look forward, if confirmed, to keeping an open mind and seeing if there are any changes necessary.”
(Related: ‘Raise Your Voice’ Campaign Pushes for SEC Reg BI Changes)
Sen. Mike Rounds, R-S.D., probed Roisman on his views on the SEC’s Regulation Best Interest, stating that it’s the SEC’s proposal “to address the fiduciary standard for broker-dealers providing investment advice to retail customers.”
“Can you discuss your views on what a proper fiduciary standard should look like?” Rounds asked.
“There’s a proposed rulemaking, so I have to be careful just not to prejudge,” Roisman said, adding that he looked forward to meeting with interested parties and “reviewing the very lengthy comment filing, because [the comments] are going to be able to tell you what [the agency] got right and what can be improved.”
Generally, he continued, in determining whether the rule is “appropriate,” it’s “important to look at things such as ensuring access to financial advice, as well as ‘do investors understand the nature of the relationship with a financial service provider?’, including the conflicts, how those are addressed or mitigated. Obviously investor protection.”
Another “critical thing to consider,” he added, “is whether the rule is business-model neutral, meaning that the SEC is not picking winners and losers,” and “preserving investor choice and different type of services” for investors.
Sen. Bob Menendez, D-N.J., stated that the SEC’s current proposal “fails to establish” a uniform fiduciary standard for broker-dealers and investment advisors and “puts the burden on the customer to understand the difference between brokers and investment advisors.”
Menendez then queried Roisman on why customers should have to bear the burden “of trying to decipher complex legal relationships to understand whether they are making good investment decisions.”
