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Wealth Management


Jay Clayton came out punching for the SEC’s new Best Interest Rule this week. The rule has faced a lot of criticism from all sides, but was finally approved internally. Now, Clayton is combatting critics. In particular, the SEC chairman is defending the harshest criticism of the rule—that it does not define “best interest”. Clayton argues that using a principles-based framework, which relies on a contextual definition of best interest depending on the situation in question, is a well-trod regulatory path and one that is superior to creating a definition for every scenario.

FINSUM: We don’t love this rule, but we agree with Clayton on this point. Having a highly defined rule leaves it more vulnerable to loopholes. With the current contextual structure, one has to worry whether their behavior could be considered “best interest” depending on an amorphous standard. It seems like a better way to keep bad actors in line.


In what comes as a real eye opener, the House passed a bill this week that would block the SEC’s ability to enforce its new fiduciary rule. The driving force behind the rule, you guessed it, Maxine Waters. The measure came as part of a broader bill regarding the funding of federal agencies. The bill now heads to the Senate, where it will likely be changed and then re-voted on. Democrats, who are in charge in the House, are worried the SEC’s rule does not go far enough to protect investors.

FINSUM: The interesting thing here is that this bill is likely not totally dead in the Senate. We wonder how hard the Democrats will stick to this part of it.

(New York)

The White House is considering a new plan to cut capital gains taxes. The administration is seeking to do so by indexing capital gains rates to inflation, a move that would significantly help wealthier Americans lower their tax bills. Interestingly, the White House is considering advancing the bill in such a way as to bypass Congress. The impetus for doing so is that they want to make sure the changes hit before the 2020 election.

FINSUM: This is quite logical and could have a big impact. Imagine you could exclude 2% of an annualized 8% gain from all capital gains taxes!

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