Frustration with SEC in House Oversight Hearing

By ASPPA Net Staff • October 27, 2015 • 0 Comments
  1. An Oct. 23 hearing by a subcommittee of the House Financial Services Committee became the latest stage on which House members expressed frustration over proposals related to fiduciary regulation. The Subcommittee on Capital Markets and Government hearing, “Oversight of the SEC’s Division of Investment Management,” did not have the DOL rule on its agenda, but it bubbled to the surface nonetheless.

    The hearing featured only one witness, David Grim, Director of the Securities and Exchange Commission’s (SEC) Division of Investment Management. Grim’s comments included remarks on the personalized investment advice standard of conduct. He noted that under the Dodd-Frank Act, the SEC has the authority to adopt rules establishing a uniform fiduciary standard of conduct for broker-dealers and investment advisers when providing personalized investment advice about securities to retail customers.

    Accordingly, said Grim, the commission issued a public request for information to obtain further data and other information to assist it in determining whether or not to use that authority. He added, “In March of this year, Chair [Mary Jo] White expressed her view that the SEC should act to implement a uniform fiduciary standard of conduct for broker-dealers and investment advisers when providing personalized investment advice about securities to retail customers, and directed staff to prepare such a recommendation for the commission’s consideration.” But the SEC has not done so yet, and Grim explained, “The issue is a complicated one that has been contemplated in prior years without a rule being proposed, and whether a rule is ultimately proposed and adopted depends on further analysis and action by the full commission.”

    Grim added that on May 20, the SEC proposed amendments to Form ADV, the primary investment adviser reporting and disclosure form. He said the amendments are designed to do the following:

    1. provide additional information regarding advisers, including information about their separately managed account business; and
    2. address issues that staff has identified since the Commission made significant changes to Form ADV in 2011.

    Subcommittee members were not content to merely listen, according to Investment News, which reports that some expressed irritation at the speed with which the SEC is acting, relative to the Department of Labor’s (DOL) energetic efforts to promulgate its proposed fiduciary rule.

    Grim would not give members an exact timetable for when the SEC will issue its own rule, but reported that his division “has done extensive analysis” on the matter. Nor would he provide a timetable regarding when his division will provide its analysis, telling Rep. French Hill (R-Ark.) the SEC would receive it “as soon as its ready,” a response Hill found unsatisfactory.

    Grim also would not provide his views on the DOL proposal, and reportedly responded as did White, who told Congress earlier this year that the DOL and the SEC are pursuing separate rules and are doing so under the authority provided by different laws.





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