Displaying items by tag: SEC

(New York)

Nobody in the industry wants to hear it, but that doesn’t mean it isn’t true. Think Advisor has just published an article arguing that the DOL rule may still pose a comeback and that RIAs need to keep the DOL-guided compliance procedures they developed in place. The argument is that though the DOL let the May 1st appeal deadline to its Fifth Circuit Court loss pass, it still has until June 13th to escalate the case to the US Supreme Court. If it does so, a stay in the Fifth Circuit Court’s ruling is likely, meaning the rule would technically still be in place until the Supreme Court delivers its verdict.

FINSUM: Obviously no one knows what the DOL will do, especially because the motivation to escalate this seems to be lacking. That said, it still has the choice and so advisors must keep their compliance policies in place.

(Washington)

Brokers who want to publish more of their own research will now find it easier. For the last several years, publishing research on individual funds has been a complicated and risky endeavor for brokers as rules meant some research work could be seen as a sales material, subjecting it to stricter scrutiny. The SEC is harmonizing rules to allow brokers to publish research on ETFs, mutual funds, registered closed-end funds, and business development companies under the same rules that govern other types of research.

FINSUM: This delineation had existed too long and we think this is a good change of rules.

(Washington)
The DOL rule is on the way out and the SEC best interest rule is on the way in, but that did not keep the SEC from taking a parting shot at the DOL. Outgoing SEC commissioner Michael Piwowar, long a critic of the fiduciary rule, said yesterday “I think it was a terrible, horrible, no good, very bad rule … It set up an unworkable, impossible set of standards for people to comply with. The Department of Labor couldn’t have cared what we thought and what you all thought, didn’t listen to Finra, didn’t listen to state regulators or the insurance regulators, and went forward with a rule that proved to be unworkable”. Piwowar is expected to leave the SEC on July 7th following his resignation.

FINSUM: We could not think of a more comprehensive critique of the DOL rule. We think the SEC really “gets” it.

(Washington)

Advisors all over the country are wondering about a simple question—why the SEC did not use the word “fiduciary” in its new best interest rule. The answer to the question had remained obscure until this week, when SEC chairman Clayton answered it at a conference following a question by FINRA CEO Robert Cook. Clayton said that the new rule is “definitely a fiduciary principle, just like the fiduciary duty in the investment advisor space is a fiduciary principle”, but continuing that calling standards for both brokers and advisors “fiduciary” and “then defining them would not make it clear that the relationship models were different”.

FINSUM: So basically the SEC avoided using the word so as not to muddle the difference between the relationships of brokers to clients vis-a-vis advisors to clients.

(Washington)

It was already all but over, but now it is really over and done with. States, including Oregon, California, and New York, made a last ditch (and well-worded we might add) bid to step in as defendants in the Fifth Circuit court case regarding the DOL fiduciary rule. The sates want to step in to appeal the rule. Last week was their second attempt to do so, and now the Fifth Circuit Court has turned down their second push, which means the ruling appears final. The denial was made by the same panel of judges as originally vacated the rule, though the denial was unanimous this time.

FINSUM: We think the rule is finally gone for good, but never say never in this story.