April 7, 2011 / 3:58 PM / 8 years ago

SEC sees fiduciary standards late in 2011-SIFMA

* Key mutual fund fee may not be addressed until 2012

* Wall St lobbying group gets more assertive in Washington

By Joseph A. Giannone

NEW YORK, April 7 (Reuters) - The Securities and Exchange Commission does not expect to complete rules on a fiduciary standard for broker-dealers until later this year, SEC Chairman Mary Schapiro was quoted as telling a securities industry trade group.

She also said budget and resource constraints meant some issues, like changes to 12b(1) mutual fund fees paid to brokers, would not be addressed until 2012 at the earliest.

Schapiro’s remarks were reported by John Taft, chairman of the Securities Industry and Financial Markets Association, which met with the SEC chief earlier this week to discuss the status of pending rules.

Taft told a SIFMA conference on Thursday, “The SEC will probably undertake rule-making for the fiduciary standard later this year.”

Schapiro “acknowledged the SEC has competing priorities and a shortage of resources. They are triaging between the various priorities,” said Taft, RBC Wealth Management’s U.S. chief executive.

SEC officials were not immediately available for comment.

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)

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