Displaying items by tag: DoL

(Washington)

One big anxiety that has been on every broker’s mind since mid-January is: is the SEC going to be make Reg BI compliance tougher, or introduce something even worse? A lose-lose ...View the full story on our partner Magnifi’s site

(New York)

Rollovers are obviously critical to almost all advisors, yet many don’t have seem to have gotten the memo: rollovers are changing significantly. The big change stems from the fact that Biden just let the new Trump era fiduciary rule go into effect, which was unexpected. According to the new rule, rollovers count as fiduciary advice. This is counterintuitive for many, as one leading industry lawyer, Brad Campbell from Faegre Drinker, commented “People have made the argument that rollovers cannot be fiduciary advice because it’s a one-time recommendation”. Here is the full analysis: “If you and the participant that you’re recommending rollover to, even though you advised them to do the rollover now, when you entered into that arrangement to give that advice, did both of you intend that you would meet again in the future to give more advice? To actually manage the assets or advise about managing the assets in the IRA? … If the answer is yes, we both intend to meet in the future, then DOL views it as an anticipated ongoing relationship. In other words, the beginning of an advice relationship that is fiduciary from the initial advice”.

FINSUM: This is pretty clear once you understand the logic, but on the surface it is a little hard to discern. Because no one expected this rule to actually go into effect since the election, many seem to be unprepared.

(Washington)

Reg BI has been in the spotlight recently. With incoming SEC chief being grilled by Congress before potentially being appointed, there is a lot of anticipation about where things might be headed. Some think Gensler will move quickly to alter Reg BI, while others (including us), think that he might move slower because of potentially more pressing issues like meme stocks and bitcoin. However, one change that may come quickly is a simple but important one: changing the regulation’s name. There is a loud call for the SEC to change Reg BI’s name because many say it is “grossly misleading” since it is not a true fiduciary rule. Gensler could potentially make this change much more easily than actually modifying the rule, so it makes sense this could be an immediate measure to appease critics.

FINSUM: What we find interesting here is that calls to change the name are not just coming from fiduciary rule advocates and the like, but also from brokers. The latter seem to be having some trouble with the clients thinking they are fiduciaries when they aren’t, which can then lead to big blowups/lawsuits.

(Washington)

In what comes as a surprise to the entire industry, President Biden’s administration has just let the Trump-era version...View the full story on our partner Magnifi’s site

(Washington)

The meme stock frenzy is one of the best things that could have happened to broker reps. Why is that you might ask? Because it probably just distracted the new leadership of the SEC for about a year. The meme stock frenzy has dominated headlines and become a Democratic cause, which means newly nominated SEC chief Gensler will likely be focusing on that immediately upon taking over. Bitcoin is another emerging issue given the huge run-up in prices and public focus. Reg BI is obviously very important, but may become second fiddle because of the other, more newsworthy issues.

FINSUM: This makes perfect sense. It seems likely that the SEC might not move as fast in Reg BI changes because of Robinhood/meem stocks. As evidence of this, look no further than Reg BI hawk Barbara Roper, who has recently been talking more about Robinhood.