Displaying items by tag: SEC

Monday, 28 October 2019 12:10

Court May Strike Down SEC’s Reg BI

(New York)

Regulation Best Interest could be on the verge of being struck down in court just like the DOL’s Fiduciary Rule. A consortium of state attorney generals and fiduciary advisers has brought a consolidated lawsuit aiming to stop the rule. The case was rapidly dismissed by the Southern District of New York because of a lack of subject matter experience and it will now be heard by the 2nd Circuit Court. The plaintiffs are arguing that in its current form the rule does not meet the clear demands laid out in the Dodd-Frank Act.

FINSUM: The smart money is on the SEC prevailing, but we expect this will just be an opening salvo in a long legal battle over the rule.

Published in Wealth Management
Thursday, 24 October 2019 08:44

Original DOL Rule Seeing New Life


Yes, you read the headline correctly. The original DOL rule—the one vacated by the courts in 2018—is seeing new life breathed into it. We are not talking about the DOL Rule 2.0 effort being led by Scalia and company at the DOL, we are talking about the Obama era proposal. So who is bringing the new rule back, or at least proposing to do so—Elizabeth Warren. In a little covered policy release earlier this month, Warren vowed she would restore the Fiduciary Rule (1.0). She wanted to bring back “The Labor Department’s fiduciary rule that the Trump administration delayed and failed to defend in court, so that brokers can’t cheat workers out of their retirement savings”.

FINSUM: Add this to the long list of CFPB-oriented measures Warren wants to enact if she wins the election. On a separate note, it is very annoying how politicians so casually call all brokers cheaters when it is really a small sample of bad actors.

Published in Wealth Management
Wednesday, 23 October 2019 10:01

DOL Proposes New Disclosure Rule


The Department of Labor has just proposed a new rule for advisors. We know what you are thinking—“oh boy, another DOL rule”. However, this new one might be quite a positive development. The new rule concerns disclosure. Specifically, it is a new proposal to allow retirement plan sponsors to make disclosures electronically. It would actually make electronic disclosure the default method. The proposal also includes additional protections for participants, including standards for the websites where disclosures are made.

FINSUM: This seems on the surface like a good idea, as it saves time, money, and hassle. Industry commentators have so far been supportive of the idea, but there has not been an in-depth review yet.

Published in Wealth Management
Tuesday, 22 October 2019 09:21

Here is Why the Industry Isn’t Fighting Reg BI


Speaking as a financial publication, the SEC’s new Reg BI has been an odd story to cover. For something so consequential to the industry, there has been quite scant coverage of it, and very little industry commentary from actual advisors and networks. Unlike the DOL rule, there has not been the ceaseless cacophony of voices chiming in for and against the rule. But why? The answer is that the SEC has much sharper teeth than the DOL. Unlike the DOL, which has a very narrow scope of regulation in wealth management, the SEC is the principal regulator of the industry, and thus nobody wants to get on its bad side with aggressive commentary about the rule. Accordingly, everyone has been quite tight-lipped, even in interview requests.

FINSUM: This makes a lot of sense. If one wants to get really critical of the SEC’s new rule, they better have very deep pockets for lawyers, as the SEC can basically put any firm out of business.

Published in Wealth Management
Friday, 18 October 2019 09:46

The Reg BI Headache is Just Beginning

(New York)

There are many big concerns surrounding the new Reg BI. It is considered an industry-friendly regulation, but questions abound: can we call ourselves advisors, how should we conduct rollover advice etc. The truth is that the pain and anxiety has not even really begun. Being a principals-based rule, Reg BI really won’t be understood until enforcement has begun. Therefore, it is very hard to plan for how to deal with certain questions until one feels how the SEC is behaving in practice.

FINSUM: There is a lot of uncertainty regarding this rule. In some ways, it could turn out to be very light touch, or it could be very onerous. It all depends on how it is enforced.

Published in Wealth Management
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