Wednesday’s the day.
The Securities and Exchange Commission (SEC) will hold meetings on the “Sunshine Act,” the next step in developing its own version of a fiduciary standard for 401k and investment advisors, or as the announcement notes, “whether to propose a Commission interpretation of the standard of conduct for investment advisors.
Specifically, the SEC will mull whether to propose “new and amended rules and forms to require registered investment advisors and registered broker-dealers to provide a brief relationship summary to retail investors.”
It will also decide on whether to propose “a rule to establish a standard of conduct for broker-dealers and natural persons who are associated persons of a broker-dealer when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer.”
An SEC version of something similar to the Department of Labor’s Conflict of Interest Rule has long been expected, and was given additional credence when the Fifth Circuit Court of Appeals struck down the Department of Labor’s fiduciary rule in mid-March, sending shock waves throughout the investment and retirement savings industries.
In the DOL’s case, the court, citing arguments made by plaintiffs’ groups—including the U.S. Chamber of Commerce, Financial Services Institute, and the Financial Services Roundtable, among others—said in its opinion that “…we REVERSE the judgment of the district court and VACATE the Fiduciary Rule in toto.”
“As might be expected by a Rule that fundamentally transforms over fifty years of settled and hitherto legal practices …a full explanation of the relevant background is required,” the judges wrote before launching into a comprehensive explanation of just that, beginning with a Congressional passage of ERISA’s in 1974.
In its 2 -1 decision, the court said, “The stated purpose of the new rules is to regulate in an entirely new way hundreds of thousands of financial service providers and insurance companies in the trillion dollar markets for ERISA plans and IRAs.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
