Displaying items by tag: SEC

(Washington)

The fiduciary topic has mildly faded into the background in the media lately. The reason why is that the SEC and DOL are both in major revision/redrafting mode, with new versions expected to be released later this year. No one is sure how those will play out, but the most likely case right now appears bleak for advisors and the industry—a broad and relatively mild SEC best interest standard undergirded by much stronger and strict state-level fiduciary rules. That vision may be terrifying to some as it would create a complicated, and likely contradictory patchwork of state and federal rules, making inter-state business more difficult.

FINSUM: Patchwork from hell?

(Washington)

Don’t be fooled by the relative calm and quiet surrounding the fiduciary rule space. While the SEC’s BI Rule is being assessed, fiduciary rules are continuing to pop up at the state level all over the country. Nevada and Maryland are now pushing forward state fiduciary rules. They argue that in the absence of a federal rue, it is states’ job to step in and protect residents. The pair of states join many others doing the same, including New Jersey and New York.

FINSUM: You don’t see Nevada and Maryland put on the same list for almost anything! But that is a testament to how widespread this state-based push for fiduciary rules is.

(New York)

Something very odd is happening at both the DOL and SEC. Ever since the fiduciary rule was killed by the courts earlier this year, a renewed sense of purpose seems to have washed over both agencies. While many thought complacency and a light hand would be the guiding approach of both regulators in the Trump era, somehow the opposite has happened. Now, industry lawyers say both regulators are pursuing enforcement at “epic levels of tenacity”. The focus has increasing been on the 401(k) business, but attention and activity has expanded across the board.

FINSUM: When the DOL declined to push its rule further, and the SEC stopped short of using the word “fiduciary”, most somewhat suspected there was going to be a lighter touch approach. Something has really changed.

(Washington)

The Fiduciary Rule is supposed to be dead, right? Well that seems to be more of a myth than reality, as the rule has taken on a life of its own in many forms. Not only is the DOL planning to issue a second version of the rule in 2019, but many states are now creating out their own fiduciary rules. For instance, New Jersey is poised to become one of the first states to adopt a uniform fiduciary standard. Many others already have various fiduciary standards that were put in place after the demise of the first rule. Those that have or are considering changes incude Nevada, Connecticut, California, South Carolina, and South Dakota.

FINSUM: There is a definitely a strong fiduciary undercurrent slowly pushing across the country. However, some states have definitively ruled that a fiduciary relationship does not exist between a client and broker, including New York.

(Washington)

One of the big concerns advisors should have right now is how the newly Democratic House might affect fiduciary regulation. Most will be aware that the SEC Best Interest rule was much lighter touch than the first version of the DOL rule. However, on top of the DOL rule making a return in 2019, the SEC could be derailed by the House. Maxine Walters, a staunch fiduciary advocate, will now head the House Financial Services Committee and it seems liklye the House will call SEC head Jay Clayton in for a questioning session where they press him to add a fiduciary element to the current Best Interest rule.

FINSUM: The exact path to derailing the SEC rule is still a little unclear. Because Trump has already appointed the heads of the relevant agencies, the House has an unclear ability to get in the way.