The Securities and Exchange Commission staff member who coordinated its study of a universal fiduciary duty for retail investment advice said last Monday that a follow-up regulation won't come until later in the year
The Securities and Exchange Commission staff member who coordinated its study of a universal fiduciary duty for retail investment advice said last Monday that a follow-up regulation won't come until later in the year.
The fiduciary study, mandated by the Dodd-Frank law, was delivered to Congress in January. The staff report called for SEC commissioners to extend the fiduciary-duty requirement to broker-dealers to protect investors, who it says are confused by differing standards that investment advisers and brokers must meet.
The study, however, has run into resistance from the two Republican SEC commissioners, Kathleen Casey and Troy Paredes, who dissented when it was transmitted to Capitol Hill. They argued that the study's conclusion wasn't backed up by rigorous economic analysis.
LETTER TO SCHAPIRO
Congressional Republicans recently sent a letter to SEC Chairman Mary Schapiro urging her not to proceed with rulemaking, citing the same concerns expressed by Ms. Casey and Mr. Paredes.
A Dodd-Frank timeline on the SEC website says that the commission will promulgate a fiduciary-duty regulation sometime between April and June. Dodd-Frank authorizes the SEC to proceed with the rulemaking.
But Jennifer McHugh, a senior adviser to Ms. Schapiro and coordinator of the fiduciary study, told an audience at the Investment Company Institute's Mutual Funds and Investment Management Conference last week in Palm Desert, Calif., that SEC action will “likely occur later in the year.”
The SEC hasn't formed a “rulemaking team” and is “meeting with outsiders to get their reaction rather than moving straight to rulemaking,” Ms. McHugh said.
“We've been focused on practical, real-world implications” of imposing a universal standard of care, she said.
E-mail Mark Schoeff Jr. at mschoeff@investmentnews.com.
