WASHINGTON(Reuters) - The top U.S. securities regulator on Wednesday identified some issues he wants to tackle, including finding “common ground” with the Labor Department’s rule requiring brokers who give investment advice to put their clients’ interest ahead of their own potential commissions.
In an appearance at the U.S. Chamber of Commerce, Securities and Exchange Commission Chairman Jay Clayton raised some concerns about the Labor Department’s so-called “fiduciary rule,” which aims to reduce conflicts of interest among brokers offering advice on retirement investments.
Consumer groups pushed for the Obama administration rule, saying excessive fees eat away at needed retirement income. Financial companies opposed it, saying it limits consumer choice.
The Labor Department is seeking comments on whether to scrap or amend the rule. The SEC, the primary regulator of brokers with power to write its own fiduciary rule, has also asked the public to weigh in.
“It would be extremely disappointing to me if whatever direction we go here resulted in a substantial reduction in choice for the individual investor,” Clayton said, echoing the criticism Wall Street firms have put forward.
He added that it would be problematic to have two disparate regulatory regimes for how brokers offer advice between the SEC and the Labor Department.
Without offering specifics on any potential changes, Clayton also said he would like to address the proliferation of shareholder proposals and the power proxy advisory firms wield over corporate governance.
He asked whether the “idiosyncratic interests” of a few shareholders should lead to increased costs for the “ordinary shareholder” and said the SEC was looking closely at the “fair amount of influence” the proxy advisory firms have.
The Chamber previously sued the government to prevent the fiduciary rule’s implementation. It has also called for reforms to rules governing shareholder proposals and the role of proxy advisors play in corporate elections.
Activist investors have pushed back on some of the Chamber’s recommendations, saying the process is working and pointing to the willingness of large asset managers to back proposals once considered distractions.
In May, BlackRock Inc backed a measure calling on Exxon Mobil Corp to report on risks it faces from climate change.
Clayton reiterated his commitment to making it more enticing for companies to go public, a goal that led President Donald Trump to nominate him to the top SEC post.
He answered a few questions from the audience, but declined to speak afterward with a small crowd of reporters who had hoped to get more details on his plans.
Additional reporting by Ross Kerber in Boston
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