Displaying items by tag: SEC

(Washington)

Not to be outdone by the DOL, the SEC made some comments on its forthcoming Best Interest Rule yesterday. SEC chief Clayton has been tightlipped about the rule and its updates, but yesterday said that it would be out soon, likely much sooner than expected. The expectation has been that the SEC would debut the rule in the fall, but speaking on timelines Clayton said “Wait and see … You won't have to wait long”. Reporters taking note of the comment say he suggested the final rule was imminent.

FINSUM: We bet some unveiling of the final rule happens before Memorial Day. This means the DOL’s updated rule is likely coming very soon as well, as they are working in concert.

(Washington)

In what comes as very disappointing news to many advisors, the DOL has just confirmed worst fears—it is officially bringing the fiduciary rule back. The DOL mentioned this idea in passing last year, but not given formal word on it. However, speaking before Congress yesterday, DOL chief Acosta confirmed that the fiduciary rule was coming back and that the agency was coordinating with the SEC. Acosta declined to give a timeline, but late this year is the anticipated unveiling of the new rule. According to one industry commentator, "We see this as a positive for financial advisers and active [investment] management as the Labor standard is unlikely to include class-action liability”.

FINSUM: It is too early to know if this is good news or bad because no one has clarity on what the DOL is doing. That said, our instinct is the new rule will be less onerous than previously.

(New York)

The current plan for a new New Jersey fiduciary rule is of a new breed. The proposal goes to lengths never seen in the fiduciary regulation world, far exceeding both the SEC best interest rule and the defunct DOL fiduciary rule. The proposal is officially called the “Fiduciary Duty of Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives” and includes an expansive definition of a “recommendation”, imposes a uniform duty on both advisors and brokers, and importantly, “creates presumptive breaches if brokers and advisors do not recommend the best reasonably available option and fee arrangement”. Unlike Maryland, the state doesn’t need an internal Senate vote to enact the rule.

FINSUM: This is a very strong rule that would set an alarming, and in our view, misguided precedent for other states, or even the DOL’s update of its own rule. A presumptive breach based on single recommendations sounds ludicrous to us. Almost all decisions can be made to look poor in hindsight. Further, defining what the “best” investment selection is at one point is nearly impossible.

(Washington)

The anti-fiduciary rule crusaders have been more successful than anyone could have imagined. Back in 2017, the slew of industry groups fighting the DOL’s rule looked woefully outgunned. But in time, they completely succeeded. They are coming off another fresh victory as well—in Maryland—but the next battle looks to be even bigger. That battle will be in New Jersey, a state that seems to have taken the stage as a leader in the state-level fiduciary rule push growing across the US. Unlike Maryland, New Jersey is committed to a rule, which makes this fight more substantial. The new rule in NJ also has the support of some advisors there, giving the proposal more traction.

FINSUM: In our view, it will likely be harder to stop the spread of these state level fiduciary rules than it was at the national level, if only because it is harder to concentrate opposing resources across the whole US. Also, if a state truly has conviction about the rule, it seems more likely to come to fruition.

(Washington)

The Trump administration has slowly but surely exerted its influence on the SEC. After two and half years, the changes are reaching their zenith. The last Democrat at the SEC is set to step down later this year. He is technically entitled to stay through June 2020, but is likely to leave before the autumn, when he is set head back to academia. The departure will open the door to a more conservative appointment. It would also mean there are only three commissioners left at the SEC, two of whom are Republicans, giving them an advantage in SEC matters.

FINSUM: This could have all sorts of ramifications for policy, including the best interest rule. We expect this may have some significant impacts on the the BI rule plays out.