Reuters logo
UPDATE 1-US SEC sees fiduciary standard rules late in 2011
April 7, 2011 / 6:44 PM / 6 years ago

UPDATE 1-US SEC sees fiduciary standard rules late in 2011

* Key mutual fund fee may not be addressed until 2012

* Wall St lobbying group gets more assertive in Washington (Recasts to reflect SEC confirmation of rule-making plans)

By Joseph A. Giannone

NEW YORK, April 7 (Reuters) - The Securities and Exchange Commission said on Thursday it does not expect to complete rules on a fiduciary standard for broker-dealers until later this year.

Changes to 12(b)1 mutual fund fees paid to brokers likewise may not be addressed until 2012, at the earliest, an agency spokesman said.

Earlier on Thursday, John Taft, chairman of the Securities Industry and Financial Markets Association, said SIFMA officials met Chairman Mary Schapiro earlier this week to discuss the status of pending rules.

Taft, speaking at a conference hosted by the securities industry trade group, reported Schapiro said the SEC’s budget and resource constraints meant some issues would be taken up later than previously planned.

“The SEC will probably undertake rule-making for the fiduciary standard later this year,” Taft told an audience of about 250 securities industry executives.

Schapiro “acknowledged the SEC has competing priorities and a shortage of resources. They are triaging between the various priorities,” said Taft, who also heads the U.S. wealth management division of the Royal Bank of Canada (RY.TO).

SEC spokesman John Nestor, asked to confirm Taft’s comments, said: “The (SEC‘s) staff expects to present a proposal for the commission’s consideration in the second half of 2011.”

Nestor also said the topic of the trailing mutual fund fees would be addressed towards the end of 2012.

“The staff expects to turn back to 12(b)1 after the one-year anniversary of Dodd-Frank and its required rulemakings,” Nestor said in an email statement.

These fund fees have been criticized for years because they add to the cost of mutual funds. Brokers like these fees because they generate income long after a fund has been sold to clients.

The financial crisis of 2008 paved the way for the sweeping Dodd-Frank financial regulatory reforms last summer. The law provides a blueprint for regulatory agencies charged with drafting hundreds of new rules and conducting dozens of studies.

Some rules may not be written as soon as once thought. Taft, on the sidelines of the SIFMA conference, told Reuters that trailing 12b(1) fees for broker-sold mutual funds are essentially “off the table” for now.

The SEC has appealed to the U.S. Congress for increased funding, but the Republican majority in the House of Representatives has been less than sympathetic as it searches for ways to cut federal spending and ease some regulation.

Taft said SIFMA sees an opportunity to be more assertive in Washington, calling on lawmakers and regulators to coordinate when addressing overlapping rules and to address the myriad new rules in a logical sequence.

“We want to make sure the regulators don’t write poorly crafted rules, that they do not restrict our clients’ access to a broad range of products and services, and that they do not constrain what services they get and how they pay for those services,” Taft said in his presentation.

Taft later told Reuters that SIFMA, which lobbies on behalf of Wall Street’s brokerages and investment banks, is not asking for and does not support repeal of Dodd-Frank.

His comments to the SIFMA conference represented a more assertive tone by Wall Street since even six months ago, when brokerages and investment banks put their support behind Dodd-Frank, followed by behind-the-scenes lobbying of regulatory rule-makers.

Taft said SIFMA opposed applying a “retread” version of the 1940 investment advisers act to broker-dealers, who since the Franklin Roosevelt administration have been held to an easier “suitability” standard. Brokerages are concerned that a strict fiduciary standard could block their sales of some investments. (Reporting by Joseph A. Giannone; editing by John Wallace and Andre Grenon)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below