House Committee Presses SEC’s White on Fiduciary Standard

By ASPPA Net Staff • November 19, 2015 • 0 Comments
Securities and Exchange Commission Chairman Mary Jo White on Nov. 18 faced some tough questions from members of the House Financial Services Committee from both parties concerning her agency’s work on setting a uniform fiduciary standard of conduct. White was testifying before the committee regarding the SEC’s agenda, operations and 2017 budget request.

White reiterated her support for her agency setting the standard, but her comments also conveyed the deliberate and cautious approach she and the SEC appear to take on the matter and were short on specifics regarding when that will take place and what such a standard would entail. The committee would have none of it.

In his opening statement, Chairman Jeb Hensarling (R-Texas) said, “The SEC has an opportunity to act and stop the Labor Department from making financial advice and retirement planning less available and more expensive for Americans with low and moderate incomes. This we hope they successfully do.”

According to Investment News, White assured Hensarling that the SEC will share its analysis of the impact a uniform fiduciary standard would have before her agency makes a formal proposal. She also said the SEC will be attentive to whether a “best interest of the client” rule regarding investment advice would make advice more expensive.

White told Rep. Ann Wagner (R-Mo.) that she expects SEC staff to develop an outline of the uniform fiduciary standard rule “in the very short term,” Investment News reports. But she stressed that it was part of a long process and said that once the staff work is done, the commission itself will first decide whether to proceed at all — and if it does, what the parameters of a rule would be. Then it would get down to specifics on the standard itself.

“I recognize that this is a complex issue,” she said, adding that “that there are significant challenges that will need to be addressed in proposing a uniform fiduciary standard, including how to define the standard, how it would affect current business practices, and the nature of the potential effects on investors, particularly retail investors.”

White had made similar comments at the Nov. 10 annual meeting of the Securities Industry and Financial Markets Association (SIFMA).

Rep. David Scott (D-Ga.) challenged White regarding what he considers its docility on the rule, according to Investment News. “Why are you allowing the Labor Department to take over your territory that we put in Dodd-Frank that was approved by the House, approved by the Senate and signed by the president?” he asked her.

White disputed that view, asserting that the agencies are separate and play different roles in regulating fiduciary functions. Scott, however, was not impressed and told White the SEC should take its authority back.

“The Department of Labor should not act to define how an investor receives financial advice,” the committee said in its press release on White’s appearance.