SEC Considering Its Own Version of Delayed Fiduciary Rule

Chris Gaetano
Published Date:
Apr 24, 2017

The acting chair of the Securities and Exchange Commission (SEC) said his agency could implement its own version of a Department of Labor regulation (DOL) requiring the use of the fiduciary, rather than suitability, standard, which the Trump administration delayed before it could go into effect, according to the Wall Street Journal. If the SEC produces its own version of the rule, it would cover all investment advisers, rather than just the retirement investment advisers that the DOL regulates, and so would be more expansive. However Acting Chair, Michael Piwowar has long cast himself as an opponent of the rule, saying that the regulation does little to protect investors while making it easier for brokers to be sued. Because of this, supporters of the current measure expressed worry that any rule written by the SEC would be weaker than the one put out by the DOL, which was meant to discourage conflicts of interest. Opponents, however, hailed the possibility, saying that the DOL's version unnecessarily binds brokers' hands on what services they can offer.

Piwowar, said he plans to discuss the matter with Jay Clayton, Trump's pick for SEC chair, once he is confirmed. Clayton himself, a securities lawyer, has said he wants the commission to focus less on regulation and enforcement and more on making public markets more attractive to investments. In this respect, he has come out against things like federal foreign bribery rules, which he thinks limits firms trying to establish overseas presence, and other rules that he feels place undue burdens on small businesses. 

Revising the fiduciary rule would be in step with moves in other parts of the administration to unwind Obama-era rules and regulations. Accounting Today noted that the president has instructed Treasury Secretary Tim Mnuchin to review IRS regulations implemented over the last eight years. Specifically, the secretary is to evaluate regulations on whether they place an undue financial burden on taxpayers, are needlessly complex, create unnecessary requirements or exceed what’s allowed under the law. This could include the Obama administration's measures to curb corporate inversions through discouraging earnings-stripping, which is when a company performs an inversion and then lends money to the U.S. branch that became a subsidiary in the process. Such cuts would be on top of an already existing order that temporarily halts the creation of new regulations, as well as administration-wide requirements that federal agencies find two regulations to cut for every new one they implement. 

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