| June 26
June 26 The U.S. Securities and Exchange
Commission is trying to determine the impact that a plan by the
U.S. Department of Labor could have on investors who turn to
brokerages for retirement guidance, an official said on
The retail brokerage industry has fiercely opposed the Labor
Department plan. It would require that financial advisers who
give advice to clients about individual retirement accounts
(IRAs) and workplace retirement plans such as 401(k)s act as
fiduciaries, or in their clients' best interests.
The industry has said that would drive costs up, making IRA
advice unaffordable for many investors because Wall Street
brokers would not be able to sell the same types of products as
they do now.
The U.S. Securities and Exchange Commission staff is giving
"technical assistance" to the Labor Department, Stephen
Luparello, director of the SEC's Division of Trading and
Markets, told the U.S. House Financial Services Committee at a
Both regulators have been looking at the fiduciary issue for
years. The Labor Department, which oversees the regulation of
retirement plans, withdrew a previous version of its planned
rule in 2012, after fierce industry opposition about costs. It
recently delayed its unveiling of a new proposal to early 2015.
Labor Department officials there have said they are
concerned about potential conflicts of interest posed by
advisers who suggest that clients roll over their workplace
retirement plans into IRAs and then earn commissions from trades
in those accounts.
The SEC has also been considering whether to revise its
adviser conduct rules.
Wall Street, concerned about potential conflicts between the
two plans, has been pushing for coordination between the SEC and
Labor Department to avoid conflicts between the possible
"Among other things, the staff is seeking to assess the
practical impact potential DOL rulemaking may have on investors
who seek to access advice from financial services providers,
including broker-dealers," Luparello said in prepared testimony.
Separately, the SEC is considering whether to develop rules
that would require Wall Street brokers to act as fiduciaries.
Currently, brokers must recommend investments that are
"suitable," based on factors such as an investor's risk
tolerance and age. Suitable investments, however, may not
include those that are the best or most cost-effective for
investors, consumer advocates say.
Luparello answered questions on Thursday from Representative
Ann Wagner, a Republican from Missouri, about whether investors
are being harmed by existing regulations and if the benefits of
new standards would justify the industry's costs.
Wagner sponsored legislation last year that would have made
it harder for both regulators to enact new standards for
financial adviser conduct.
"Clearly anyone needs to identify the benefit to stand up to
the cost," Luparello said. The SEC requested data from Wall
Street early last year for analyzing the costs and benefits.
However, "the level of information that flowed in was less than
what staff thought it would be," Luparello said.
The agency may consider another request, Luparello said.
(Reporting by Suzanne Barlyn; Editing by David Gregorio)