(Washington Examiner) Just weeks after the Department of Labor finalized a sweeping new rule to prevent conflicts of interest in retirement advising, the Securities and Exchange Commission said that it planned to work on its own version of the rule that will apply to all investment brokers.
The SEC included plans to propose the rule by next April in an agenda it submitted to the Office of Management and the Budget this week.
The Labor rule, finalized in early April despite heavy lobbying from the industry and determined opposition from congressional Republicans, is expected to reshape the retirement planning industry. It would apply to tax-privileged retirement savings accounts, such as Individual Retirement Accounts, overseen by the Labor Department, and would require any financial agent in that space to act in their clients’ best interest.
The SEC version, first flagged by the trade publication Investment News, would apply to all broker-dealers, which don’t have to give clients advice that is in their best interests. Under the rule, those brokers would become “fiduciaries” to their clients, meaning they would be legally liable if they provided advice that was not in their clients’ best interests.
If the SEC proposed its rule in April, which is far from guaranteed, it would be released at the same time the Labor rule is scheduled to go into effect. President Obama will have left office by then.
Mary Jo White, the current SEC chair and an Obama appointee, has previously said she supports a uniform fiduciary rule for brokers.
Republicans opposed to the rule, meanwhile, have expressed support for the SEC acting on a fiduciary rule before Labor does, arguing that the SEC has more expertise in the area. The GOP has advanced legislation that would block the Labor rule from going into effect until the SEC issues a ruling, a provision criticized by liberal proponents of the Labor rule who say Republicans are looking to block it.
Speaker of the House Paul Ryan has vowed to do “everything possible” to stop the Labor Department’s rule from going into effect.
Liberals have also argued that the SEC, being a five-member commission representing both parties, is unlikely to move on an adequate rule. One wrinkle is that the SEC currently only has three of the five positions filled, although the Senate Banking Committee advanced the nominations of two candidates to the full Senate on Thursday.