Tuesday, 24 April 2018 11:45

The SEC Fiduciary Rule Isn’t One

(Washington)

The wealth management industry will likely find itself pleased this week, as many may sense victory in the long battle against the DOL’s fiduciary rule. The SEC has now released its own proposal for a new fiduciary rule, and the rule looks favorable. The new rule would place less onerous restrictions on brokers and advisors. It will not ban any single conflict of interest, but would place a responsibility to disclose certain conflicts of interest to clients and take steps to mitigate their effects. The rule does not contain a specific provision allowing clients to sue their brokers for misbehavior. The SEC would also disallow the use of blurred titles, such as “financial advisor”. The SEC approved the rule by a 4-1 vote and it will now have an official comment period.


FINSUM: The one dissenting vote blasted the rule as a continuation of the status quo. To be honest, the proposal sounds quite favorable to the industry, with many saying it is not really a fiduciary rule (it doesn’t seem to be), and we were not expecting such a mild outcome. We think Congress will likely come down hard on the SEC. This is far from a done deal.

Published in Wealth Management

(Washington)

Many advisors are hoping the SEC will dive headlong into the fiduciary rule debate and quickly put in place a new fiduciary standard of their own. SEC chairman Jay Clayton has said it is a priority, and hopes got a big boost this week as the SEC is holding a pubic meeting to discuss the specifics of forming a new rule. However, those hoping for a quick resolution will be sorely disappointed, as there are still many steps, and many potential pitfalls, before the rule could become a reality. In particular, the DOL could still challenge its court loss, and many lawsuits could hold up the implementation of any SEC-proposed rule.


FINSUM: When you really take a look at the procedure and the legal risks, the timeline to actually get a new rule in place seems very far away indeed.

Published in Wealth Management

(Washington)

Well, after a long wait (but perhaps one shorter than most expected), the SEC is ready to announce its framework for a new fiduciary rule this week. The SEC plans to hold a public meeting to discuss the three components of its new rule: “whether to propose new rules and forms for brokers and RIAs to summarize their relationships with clients; whether to establish a standard of conduct for brokers; and whether to provide an “interpretation” of the fiduciary responsibility of RIAs”. Advocates of the current DOL rule don’t like the approach the SEC is taking because it appears to be disclosure-based, something they think is insufficient to fulfil the need for fiduciary duty.


FINSUM: To be honest we did not think the industry would be able to have this much insight into the new SEC rule this quickly. Stay tuned.

Published in Wealth Management
Tuesday, 06 March 2018 09:14

SEC Threatening Advisors on Disclosures

(Washington)

A couple of weeks ago we ran a piece quoting the SEC saying that it was trying to get advisors who had violated client disclosure rules to come forward themselves. The promise was that if they voluntarily came forward they would be treated with a much lighter hand. Well, the SEC has showed the other side of that coin this week, saying “Those of you who counsel investment advisors, we hope you will counsel them to participate in the program … If not, we promise that if we find them later we will punish them more severely”.


FINSUM: The SEC is really going to throw its weight around on this issue and it seems like advisors who have broken the rules would be well advised to come forward.

Published in Wealth Management
Wednesday, 28 February 2018 08:16

SEC Easing Disclosure Requirements

(Washington)

The SEC appears to be following through with the President’s mandate to lower the regulatory burden across all industries. The regulator is in the middle of easing disclosure requirements on companies. According to the Wall Street Journal, the new changes include “expanding the definition of small reporting companies, refurbishing risk-factor disclosure guidelines and streamlining the requirements for registered debt securities and acquired business disclosures”. Companies may now also secretly file IPO documents.


FINSUM: The US, and especially the financial sector, had, in our opinion, become over-regulated in the last decade, so it is good to see an easing of the burden.

Published in Wealth Management
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