Jan 16 More details about a plan to require
beefed-up ethical standards for brokerage firm advisers could
emerge by the end of March, securities industry leaders said on
The Securities Industry and Financial Markets Association, a
trade group, expects movement by the top U.S. securities
regulator in the coming months on a plan that would require
advisers to act as fiduciaries, or in their clients' best
interest, according to Kenneth Bentsen, Jr. SIMFA's head of
public policy and advocacy.
But it is unclear how the U.S. Securities and Exchange
Commission, which is developing the plan, will convey new
details, Bentsen said during a briefing to reporters about
securities industry priorities for 2013. The SEC could issue a
draft proposal or may request information from the industry to
analyze costs and benefits stemming from the plan, he said.
At issue is a long-running controversy about the differences
in responsibilities toward clients for securities brokers, who
register with the Financial Industry Regulatory Authority
(FINRA), and registered investment advisers (RIAs), another type
of financial adviser that is overseen by the SEC.
While RIAs must act as fiduciaries - that is, putting the
best interest of clients first at all times - brokers now need
only recommend securities that are "suitable" for clients, based
on factors such as risk tolerance and age. For example, they can
sell a product on which they earn a bigger commission if it
meets the criteria, even if an equivalent product is cheaper or
has a better performance track record.
The recent departure of SEC Chairwoman Mary Schapiro,
however, could be a stumbling block toward finalizing any
proposal, industry professionals say. President Barack Obama
appointed SEC Commissioner Elisse Walter as chair after
Schapiro's departure. [ID nL1E8MQ73H]
But the agency now has four commissioners instead of five -
a make-up that can lead to ties when commissioners vote on
proposed rules. It not known when the administration will
appoint a fifth commissioner.
There is, nonetheless, a "will" at the agency to complete
the proposal, Bentsen said.
An SEC spokesman declined to comment on Bentsen's remarks.
The planned proposal is already behind schedule. An SEC plan
to amass more industry data for the proposal was also discussed
in January 2012.
SIFMA also expects the Department of Labor to re-propose a
controversial rule by mid-year that would impose a higher
fiduciary standard of care on advisers serving retirement plans.
The department in September 2011 withdrew an initial rule it
proposed in 2010 after industry groups and lawmakers expressed
continued concerns about costs to the industry and whether the
new rule would clash with the SEC's separate fiduciary proposal.
A Department of Labor regulatory schedule lists early July
as an anticipated reproposal date.