WASHINGTON May 19 A U.S. Securities and
Exchange Commission official publicly said what agency
observers have long suspected: there may not be sufficient
consensus among its five commissioners to write rules that would
create a streamlined fiduciary rule for retail brokers and
"There may not a real coalescence of thought around it,"
said Stephen Luparello, director of the SEC's Division of
Trading and Markets. The issue, however, remains "a live topic
of conversation," said Luparello, speaking on Monday at the
Financial Industry Regulatory Authority's (FINRA) annual
conference in Washington.
The SEC has struggled for some time over how to tackle
different standards of care that advisers and brokers owe to
Advisers are held to a higher fiduciary standard and must
put their customers' interests ahead of their own. Brokers, by
contrast, are only required to make investment recommendations
that are "suitable" for their customers.
The 2010 Dodd-Frank Wall Street reform law required the SEC
to study the issue and gave the SEC the authority to write rules
but did not mandate any changes.
A resulting SEC study, released in 2011, called for creating
a uniform standard that would still be flexible enough to
accommodate different business models.
Brokers have embraced the concept, saying they are
supportive of a new standard as long as they can continue
selling products as they currently do. But advisers have said
they fear the SEC's rule could water down the fiduciary
standards they have long supported.
Republican SEC Commissioner Daniel Gallagher, in a recent
speech, cautioned the agency against rushing to adopt a rule,
saying the SEC should "get all the facts" first.
The SEC has requested, and received, input from the public
and industry to help inform its efforts but has not acted on the
SEC Chair Mary Jo White has described a harmonized fiduciary
rule as a "major focus" of the agency, but there is still no
time frame for drafting rules. The issue is on
the SEC's 2014 agenda. Nonetheless, that is not a guarantee,
"Being on the agenda for 2014 and getting it done for 2014
are obviously two completely different things," Luparello said.
As the SEC continues its work on the issue, the U.S.
Department of Labor is also working on a proposal that would
impose fiduciary responsibilities on advisers serving workplace
retirement plans and individual retirement accounts.
(Reporting by Suzanne Barlyn; Additional reporting by Sarah N.
Lynch; Editing by Steve Orlofsky)