SEC Chairwoman Claims Fiduciary Battle Just Getting Started

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SEC Chairwoman Claims Fiduciary Battle Just Getting Started

Mary Jo White, Chairwoman of the SEC, told legislators that the agency will continue at its own pace, over an extended period of time, to address raising investment advice standards for brokers. The agency will not be rushed by a similar Department of Labor rule currently pending.

White stated before the House Financial Services Committee that the SEC and DOL are discussing the issue together but are working separately as different agencies with different jurisdictions and mandates.

White warned not to expect change any time soon: “We really are at the beginning of this process. I’ve reached my own personal conclusion. But the next step is for me to be discussing in detail all the aspects of my thinking with my fellow commissioners. It’s a long process, with lots of complex issues.”

She noted that despite her support of a fiduciary-duty rule for brokers, she still needs support from at minimum two other members of the five-person commission to pass the rule: “It’s still a ‘whether’ question, because it’s a five-member commission. I’m one of five votes.” Republican members, Daniel Gallagher Jr. and Michael Piwowar, have already expressed opposition to such a rule.

The DOL is expected later this spring to release for comment a rule that would mandate brokers to act in the best interest of their clients, or in other words to meet a fiduciary duty, when handling 401(k)s and individual retirement accounts. The opposition to this rule wants the DOL to wait for the SEC to act first, but White stands by her claim that the timing of the SEC’s action will not be affected by the DOL: “We are separate agencies, and we need to proceed separately when we think that the time is right and we have something that we think should advance.”

A number of legislators asked White whether a fiduciary-standard for retail investment advice would raise regulatory costs for brokers and make them abandon investors with modest assets. White countered that the fiduciary rule would aid small investors: “It’s to the benefit of retail investors. That’s who we’re acting for.”

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