By Elizabeth Dilts
One of the strongest proponents of the Democrats on financial regulation demanded on Thursday that big brokerages come clean about whether they would support delaying a new rule by the U.S. Department of Labor if President-elect Donald Trump's administration makes a move to do so.
The Labor Department's fiduciary rule, set to take effect in April, would require brokers to provide investment advice that is in the best interest of retirement savers.
Though the rule's start date is less than three months away, Senator Elizabeth Warren wrote that she is "troubled" by reports that Trump's administration has plans to delay the regulation as early as Monday.
Trump has not commented on the rule publicly, but his assistant Anthony Scaramucci has said the administration would work to delay or repeal the rule.
Warren, a Democrat from Massachusetts, said she sent the letter to 33 wealth management firms including Morgan Stanley, Raymond James Financial and Bank of America Merrill Lynch, because they have already spent millions to be compliant with the rule.
The letter asked the firms if they planned to reverse the changes they had made to become compliant, including for some lowering fees on certain products, if the Trump administration delayed the rule.
A Morgan Stanley spokeswoman said the bank had received the letter and was reviewing it. Bank of America and Raymond James did not respond to requests for comment.
Last year, Merrill Lynch said it would stop offering retirement services that paid advisers commissions, eliminating the possibility that advisers might push one investment product over another based on the commission they could earn.
Morgan Stanley and others have opted to keep commissions-paying accounts, but have strengthened training and compliance standards to meet the rule's higher standards.
(Reporting By Elizabeth Dilts; editing by Diane Craft)