SEC Chairman Mary Jo White said that she would provide more “clarity” regarding her position on a fiduciary standard of care for broker-dealers. Articles in ThinkAdvisor and InvestmentNews covered Chairman White’s speech at a SIFMA event. Chairman White said that a uniform fiduciary rule is “something I think is enormously important.” When asked why it has taken so long for the Commission to make a decision regarding a rule, Chairman White responded that there are “very diverse views” at the Commission. Tellingly, she added that “care needs to be taken to ensure we’re not harming investors by driving away service providers in the brokerage space.”
SIFMA President and chief executive Kenneth E. Bentsen Jr. said that SIFMA thinks “there should be a uniform standard,” but, “we think you can do it under both the 34 Act and the 40 Act. You can do it in parallel rulemaking.” Most investment adviser advocates believe this would water down the fiduciary standard in the Investment Advisers Act, while the Dodd-Frank Act specifically referenced a fiduciary duty at least as stringent as that in the Advisers Act.
The assumption has been that Commissioners Gallagher and Piwowar have been in opposition of extending a fiduciary standard of care on broker-dealers, while Chairman White would be a tiebreaker. Commissioner Piwowar has, however, made some comments recently that may show he is being swayed to at least consider a rule.
While not as on point as the harmonization of the fiduciary duty on broker-dealers, it is worth noting that SIFMA continues to aggressively fight the DOL’s changes to “fiduciary” which are due in January. At SIFMA’s conference, former SIFMA chairman Jim Rosenthal said that the organization has to become even more active in stopping the definition change.