Mary Schapiro Still Committed To Universal Fiduciary Standard, Warns On SEC Funding Issues

Friday, July 22, 2011 00:24
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Mary Schapiro Still Committed To Universal Fiduciary Standard, Warns On SEC Funding Issues

Tags: Congress | Dodd-Frank | fiduciaries | sec

At least as far as the SEC is concerned, the concept of a uniform fiduciary code for RIAs and brokerage firms does not necessarily mean "separate but equal," but the prospect may be moot without more funding.

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Mary Schapiro's latest Congressional testimony clarified her position on the fiduciary issue, which has recently veered into discussion of separate but equally stringent rules for brokers and IA reps.

 

She acknowledges that under Dodd-Frank, brokers offering advice technically only need "no less stringent" regulation than RIAs already accept.

 

However, her emphasis on the idea that this regulation should be "uniform" and "harmonized" points more toward a truly unified fiduciary code for both compensation models.

 

As she points out: "The distinction between an investment advisor and a broker-dealer is often lost on investors and it remains difficult to justify why there should be different rules and standards of conduct for the two roles -- especially when the same or substantially similar services are being provided. Investment professionals’ first duty must be to their clients, and we look forward to implementing the study’s recommendations."

 

Elsewhere, Schapiro remains convinced that the SEC needs more money to achieve its Dodd-Frank mandate to monitor clearing firms, hedge funds, derivatives trading, and a wide array of additional entities and markets.

 

Even offloading RIA oversight to a self-regulatory organization would not fill the gap, she says, since an additional 750 advisors from hedge funds and private equity firms are coming into the SEC orbit at the same time.

 

In all, she still wants another 750 staff to cover all the bases, along with the money to build out the SEC's aging technological systems.

 

 

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