Displaying items by tag: DoL

(Washington)

Advisors need to prepare themselves for what could be a harsh reality. While the wealth management business collectively holds a great deal of hope that the SEC will come out with an enlightened rule that makes much more sense than its DOL predecessor, the reality is that the SEC rule is likely to be much more expansive, and potentially much more onerous. The new SEC rule seems poised to cover all types of accounts and all groups—RIAs, B-Ds, and “associated persons”, all under a broad umbrella.

FINSUM: While the industry definitely has a much higher faith in the SEC, there is certainly an element of the “devil you know” going on here. If the rule is much more expansive, it could lead to a higher regulatory burden and yet more disruption to the industry.

(Washington)

Many advisors are hoping the SEC will dive headlong into the fiduciary rule debate and quickly put in place a new fiduciary standard of their own. SEC chairman Jay Clayton has said it is a priority, and hopes got a big boost this week as the SEC is holding a pubic meeting to discuss the specifics of forming a new rule. However, those hoping for a quick resolution will be sorely disappointed, as there are still many steps, and many potential pitfalls, before the rule could become a reality. In particular, the DOL could still challenge its court loss, and many lawsuits could hold up the implementation of any SEC-proposed rule.

FINSUM: When you really take a look at the procedure and the legal risks, the timeline to actually get a new rule in place seems very far away indeed.

(Washington)

Well, after a long wait (but perhaps one shorter than most expected), the SEC is ready to announce its framework for a new fiduciary rule this week. The SEC plans to hold a public meeting to discuss the three components of its new rule: “whether to propose new rules and forms for brokers and RIAs to summarize their relationships with clients; whether to establish a standard of conduct for brokers; and whether to provide an “interpretation” of the fiduciary responsibility of RIAs”. Advocates of the current DOL rule don’t like the approach the SEC is taking because it appears to be disclosure-based, something they think is insufficient to fulfil the need for fiduciary duty.

FINSUM: To be honest we did not think the industry would be able to have this much insight into the new SEC rule this quickly. Stay tuned.

(Washington)

The fiduciary rule has suffered many blows over the last several months, none stronger than in the 5th circuit court in March. However, despite all the doom and gloom over the rule, there is still a good chance it will hold up. The 5th circuit court was the first circuit court to come in against the rule, which paves the way for the Supreme Court to hear the case (impossible to predict the outcome there). Furthermore, the courts may let an outside party step in and take up the DOL’s right of appeal on the recent 5th circuit court ruling, all of which means the rule is far from gone.

FINSUM: We do not think fiduciary rule advocates are going to give up this easily, especially because there is still a lot of legal recourse available to them.

(Washington)

The back and forth over the fiduciary rule has been long, expensive, confusing, and bureaucratic. However, those opposed to the implementation of the rule should rejoice, as it appears it will die on April 30th. Legally, the DOL has until April 30th to seek a review of the Fifth Circuit Court’s vacating of the rule. If it does not do so by then the court’s ruling will go into effect on May 7th and the rule would dissolve. The DOL also has until June 13th to ask the Supreme Court to hear the case.

FINSUM: The DOL has already dropped a case in Washington D.C. because it was concerned the court there would uphold the rule. There seems to be a very low likelihood that they are going to challenge the Fifth Circuit Court’s ruling. The rule may very well dissolve on May 7th, but expect some drama before then as advocates make a final push.