Wealth Management
(San Francisco)
In what looks like a continuation of the recent meltdown of the Wells Fargo brand, a new scandal has come to light. The company is having several senior executives resign as a new Justice Department investigation is underway into bad practices in its wealth management unit. The accusations surround overcharging customers and inappropriate advice to wealth management clients.
FINSUM: Who knows how big this one might blow up? The scandal in its core banking business had not really affected the wealth management unit so far, but that may change.
(New York)
Rockefeller is a storied US name, but not exactly so in wealth management. That may be set to change as a new Rockefeller-branded wealth manager, Rockefeller Capital Management, has just launched with some high profile backing and executives. Industry star Greg Fleming, a former president at Merrill Lynch and former head of wealth and asset management at Morgan Stanley, is leading the young firm, which has its eye on getting $100 bn under management. The firm is backed by a Rockefeller family trust as well as a number of other investors.
FINSUM: The name alone will probably attract capital, but $100 bn is a lofty goal for a brand new wealth manager.
(Washington)
The SEC appears to be following through with the President’s mandate to lower the regulatory burden across all industries. The regulator is in the middle of easing disclosure requirements on companies. According to the Wall Street Journal, the new changes include “expanding the definition of small reporting companies, refurbishing risk-factor disclosure guidelines and streamlining the requirements for registered debt securities and acquired business disclosures”. Companies may now also secretly file IPO documents.
FINSUM: The US, and especially the financial sector, had, in our opinion, become over-regulated in the last decade, so it is good to see an easing of the burden.
More...
(Boston)
Advisors beware, your state is likely ramping up regulatory enforcement all around you. While all the focus has been on states making and/or enforcing their own fiduciary rules in the absence of the federal rule, they have also been upping their presence in other areas. For instance, Alabama is now getting involved in disputes between brokers and firms, making sure client assets do not get frozen. Massachusetts is enforcing the federal fiduciary rule, and Nevada is making and seeking to enforce its own best interest rule as well.
FINSUM: Our view on this is that there is a power and leadership vacuum in the federal regulators that has eroded states’ trust, all of which is leading to a more fractured regulatory landscape.
(Washington)
Many advisors may think it is going to take the SEC ages before it actually presents a new fiduciary rule. But that view may need to be shelved, as SEC chairman Jay Clayton has just confirmed that the rule is one of his top priorities. “We’re going to make a big effort to try and bring clarity and harmony to investment advisor [and] broker-dealer standards of conduct … I think it’s something that the market needs. I think it’s something that regulators need”. The SEC still has not confirmed a date for the debut of the rule, but most experts agree it will be this summer.
FINSUM: We think the SEC will debut a new rule, jointly with the DOL, in May or June, with the plan to implement it in spring 2019.
(Washington)
The financial industry just won a big concession from regulators. In a piece of Obama era legislation, mutual funds were set to have to make disclosures to investors whenever they hard large piles of hard-to-sell assets. However, the SEC has just pulled away from the measure, saying mutual funds will not need to do so. The measure was set to take effect in 2019, but has now been delayed because of disagreement on the total scope of the disclosures.
FINSUM: The big sticking point with this rule is that it would force asset managers to make judgments about liquidity even when they have little insight into it.