The Investment Adviser Association submitted a comment letter regarding SEC’s proposed (1) Regulation Best Interest, (2) Form CRS, (3) title reform, and (4) Advisers Act Interpretation. The letter can be found here.
Tuesday marks the close of a public comment period for the Securities and Exchange Commission’s Regulation Best Interest, a recasting of the politically imploded fiduciary standards crafted during the Obama administration by the Department of Labor. Ahead of the Aug. 7 deadline, proponents, opponents, and the not-entirely convinced weighed in with nearly equal parts praise and concern.
“In comparing the proposed Regulation Best Interest standard as well as a broker-dealer’s other requirements under the securities laws to an adviser’s fiduciary duty as described in the proposed interpretive release, only two differences stand out. First, an adviser generally has an ongoing duty to monitor over the course of its relationship with its client, while a broker-dealer generally does not. Second, a broker-dealer must either mitigate or eliminate any material financial conflict of interest it may have with its client. An adviser is required only to disclose such a conflict. Rhetoric aside, arguably proposed Regulation Best Interest would subject broker-dealers to an even more stringent standard than the fiduciary standard outlined in the Commission’s proposed interpretation.
The Commission acknowledged concerns that the imposition of a new higher standard of conduct on broker-dealers could result in retail customers losing access to advice they receive through recommendations from broker-dealers, and customers that do not have the option of moving to fee-based accounts would in effect be unable to obtain investment assistance. At a minimum, their costs of obtaining such assistance might rise markedly. Although we tried to be cognizant of these access concerns, given the relative balance of the two standards, I fear that more and more broker-dealers will decide to become advisers that offer only fee-based accounts resulting in many Americans being shut out from receiving any investment advice.”
Her full speech can be found here.
Larry Stadulis spoke to Ignites about the unusual letter Senate Democrats Elizabeth Warren (D. Mass.), Cory Booker (D. NJ) and Sherrod Brown (D. Oh.) sent to FINRA regarding proposed Regulation Best Interest. The article can be found here.
Elad Roisman, the President’s nominee to be the next SEC commissioner, is testifying today before the Senate Banking Committee (the committee for which he serves as Chief Counsel). Here is his written statement. Should he be confirmed, he would succeed Michael Piwowar, and could play a significant role regarding the Standards of Conduct Proposal.