DOL Fiduciary Rule
SEC Chair Jay Clayton Copyright Chip Somodevilla, Getty Images

SEC Is Working on a Fiduciary Rule Proposal

“You can’t put one hat on when you’re talking about 50 percent of your assets and another hat on when you’re talking about another 50 percent. It makes no sense,” said SEC Chairman Jay Clayton.

The next step in establishing a uniform fiduciary standard would be a rule proposal, and the Securities and Exchange Commission is working on one, said Chairman Jay Clayton, testifying before the House of Representatives’ Committee on Financial Services on Wednesday. The agency is coordinating with the Department of Labor, whose fiduciary standard already went into effect this year.

“If this were easy, it would already be fixed,” Clayton said. “There ought to be consistency with us and the Department of Labor. We can’t have asymmetic standards. You can’t put one hat on when you’re talking about 50 percent of your assets and another hat on when you’re talking about another 50 percent. It makes no sense.”

In June, Clayton issued a request for comment on standards of conduct for investment advisors and broker/dealers. To date, the agency has received 150 comments from investors and industry stakeholders.

Clayton took questions on the topic from Rep. Ann Wagner (R-Mo.), who last week introduced the Protecting Advice for Small Savers (PASS) Act of 2017. The bill would repeal the DOL’s fiduciary rule, create a best interest standard for b/ds, require b/ds to disclose compensation and any conflicts of interest, and limit the SEC’s rulemaking authority under Section 913 of the Dodd-Frank Act.

“It’s important that you have the same standard,” she said. “Unfortunately that isn’t the current practice, and that is causing both confusion and harm.”

She cited a recent U.S. Chamber of Commerce study, which found that 13.4 million consumer accounts will lose access to products under the DOL rule.

“A lot of the themes that you outlined are the themes that I have, which is, choice,” Clayton responded. “Investors should have a choice—what type of account they want, what type of relationship they want.” Investors should also have a choice in the assets they invest in, he said. The challenge is working with the DOL.

“They have a mandate; we have a mandate. They’re not the same, but we can cooperate and get there, I believe,” Clayton said.

“The devil’s in the details, and we’re working on it.”

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