SEC Wants Data And Comments About Harmonization Of The Rules Governing The Way RIAs Deliver Advice Versus Broker-Dealers

Monday, March 04, 2013 12:30
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SEC Wants Data And Comments About Harmonization Of The Rules Governing The Way RIAs Deliver Advice Versus Broker-Dealers

Tags: broker-dealers | compliance | FINRA | investment advisors | RIAs

The SEC s asking for hard data and other information from about the benefits and costs of the current standards of conduct for broker-dealers and investment advisers when providing advice to retail customers, as well as alternative approaches.

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Currently, two different laws govern how retail clients are served by financial advisors. The Securities Exchange Act of 1934 governs regulation of registered reps affiliated with BDs, while the Investment Advisers Act of 1940 sets the framework for regulating RIAs and invetsment adviser representatives. IA reps are fiduciaries and must do what's in their clients' best interest, while registered reps must offer advice based on what's most  suitable for clients. The SEC is considering how it can harmonize the rules so that consumers won't have to know that some advisors are governed by different standards of conduct and that some advisors switch between standards of conduct when advising a client.

 

The Commission is requesting quantitative data and economic analysis relating to the benefits and costs that could result from various alternative approaches regarding the standards of conduct.

 

You can post a comment and data in support of your opinion on the SEC website. The comment period will be open for four months, which means that the debate on applying a fiduciary standard will likely drag on through the third quarter of 2013. 

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