In SIFMA's Push For SEC To Resume Focus On Fiduciary Standard, It Stipulates Not Subjecting Reps To 1940 Investment Advisors Act

Thursday, January 17, 2013 07:59
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In SIFMA's Push For SEC To Resume Focus On Fiduciary Standard, It Stipulates Not Subjecting Reps To 1940 Investment Advisors Act

Tags: Dodd-Frank | sec | SIFMA

SIFMA is pushing for the SEC to resurrect its efforts to establish a uniform fiduciary standard that would cover both investment advisors and registered reps.
 
A stipulation is for the standard to be sensitive to the characteristics of the brokerage industry and not subject reps to the Investment Advisors Act of 1940.

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Nevertheless, SIFMA says the new standard will raise the bar for registered reps, who currently are only subject to a suitability mandate.
 
The Dodd-Frank Act gave the SEC the authority to pursue a uniform fiduciary standard but it
did not mandate it.
 
The void of a fifth SEC Commissioner could prove to be a political hurdle for the standard.
 
Former SEC chair Mary Schapiro’s departure left the SEC with only four commissioners split evenly along party lines.
 
SIFMA has listed the development of the standard as one of its top three priorities for 2013. Its emphasis for the development of a uniform standard is on increased disclosure.
 
The Institute for the Fiduciary Standard is concerned that an emphasis on disclosure does not meet the 1940 Act’s standard of doing what’s in the best interest of the client.
 
Best interest means that informed consent to a transaction must be given or the transaction cannot be executed.
 
SIFMA is keeping an open mind on an SEC fiduciary standard but is adamantly opposed to efforts similar to the Labor Department’s attempt last year to make retirement plan advisors subject.
 
The Labor Department withdrew its proposal under industry pressure that the rule would drive advisors out of the retirement market.

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