Trump Fires Fiduciary Rule: Back to Caveat Emptor for Retirees


President Trump Issues First Dodd-Frank Unwind By Striking Down Fiduciary Rule; Goldman’s Gary Cohn to be Feted by Industry Peers for Influencing Trump Regime’s “Walk Back to Wild West..Let The Good Times Roll, Again!”

As evidenced by President Trump’s executive order signed today Feb 3, it appears it doesn’t matter to him or his new regime that the US DOJ aggressively defended the new fiduciary standards proposed for financial product brokers–which among other things sought to protect elderly investors from sleezy sales people and unsavory broker-dealers who prey on clients by gauging them with egregious fees and putting those less-educated and retiree investors into inappropriate financial products. Former Goldman Sachs Honcho Gary Cohn, who upon his recent appointment as chief economic advisor to President Trump along with new role as Director of the United States National Economic Council (and who cashed in $285 million of Goldman stocks to take the government job) is credited with the walk back to wild west practices in the banking industry and is being feted tonight by the heads of top investment firms at a special dinner at …Mar-a-Lago Club in Palm Beach. According to event planners, the theme song for the dinner will be “Let The Good Times Roll, Again.” Attn: investors: CAVEAT EMPTOR.

WASHINGTON—President Donald Trump on Friday plans to sign an executive action that establishes a framework for scaling back the 2010 Dodd-Frank financial-overhaul law, part of a sweeping plan to dismantle much of the regulatory system put in place after the financial crisis.

Mr. Trump also plans another executive action aimed at rolling back a controversial regulation scheduled to take effect in April that critics have said would upend the retirement-account advisory business.

“Americans are going to have better choices and Americans are going to have better products because we’re not going to burden the banks with literally hundreds of billions of dollars of regulatory costs every year,” White House National Economic Council Director Gary Cohn said in an interview with The Wall Street Journal. “The banks are going to be able to price product more efficiently and more effectively to consumers.”

The fiduciary rule, unveiled last spring and set to go into effect in April, would restrict how brokers can provide retirement advice by forcing them to work in the best interest of their clients and generally avoid conflicts, which can come about with commission-based compensation. It stands to affect about $3 trillion of retirement assets in the U.S., according to research firm Morningstar Inc. team of capital markets experts and international securities lawyers specialize in preliminary offering prospectus, secondary offering prospectus and full menu of financial offering memorandum document preparation.

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Mr. Cohn said to comply with the rule, companies would be forced to offer retirement products with the lowest fees even if it isn’t best for their client.

See more coverage via WSJ


SEC Chairwoman: Fiduciary View-Do It Right, Not Right Away

SEC Mary Ho White

SEC Chairwoman Mary Jo White says slow pace for instituting new fiduciary mandates for brokerdealers and registered investment advisors is because “the SEC wants to avoid unintended consequences and ‘get it right.’

10 November ( Securities and Exchange Commission Chairwoman Mary Jo White said Tuesday that agency staff is “full-out” working on a proposal to raise standards for retail investment advice, but that it would take time to “get it right.” is home to the largest global database/directory of brokerdealers operating in more than 30 countries across the free world.

A primary reason for the slow pace is that the SEC wants to avoid unintended consequences, Ms. White told the audience at the Securities Industry and Financial Markets Association annual conference in Washington.

“If at the end of the day, you are depriving retail investors of reliable, reasonably priced advice, you will not have succeeded, obviously, in your purpose,” she said.

Ms. White’s comments echo those the industry makes when it criticizes the Labor Department best-interests rule for advice on retirement accounts, which is on its way toward finalization.

“It is a reminder that hopefully the DOL will reconsider [its proposal] due to the complexity of the issue,” Ira Hammerman, SIFMA executive vice president and general counsel, said in an interview. “The DOL should re-propose what they’re contemplating so that all interested parties can get one more look at what the DOL thinks the solution is.”

In the five years since the Dodd-Frank financial reform law gave the SEC authority to promulgate a rule that would require all retail investment advice to be given in the best interests of the client, the SEC has not made discernable progress.

“We will move on it as expeditiously as we can,” Ms. White said. “We must get it right and really take into account the complexities and impact. But we’re very full-out focused on it.”

In March, Ms. White told a SIFMA conference she wants the SEC to move ahead on a fiduciary rule. At Tuesday’s SIFMA meeting, she declined to give a timeline, but said crafting a proposal could be a protracted process.

“It’s not a short, quick, uncomplicated rulemaking,” she said.

In addition to a fiduciary duty rule, the SEC is working on a rule that would allow adviser examinations by third-party organizations.

In a meeting with reporters on the sidelines of the conference, Ms. White said the agency is further ahead on the exam rule than the fiduciary rule, but “it’s going to take time to do them right.”

Due in part to the timing of an SEC rule, an advocate for the DOL rule said the agency should proceed independently.

“Nothing that Chair White said today provides any justification for the DOL’s delaying or reconsidering its efforts,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “They need to finalize the rule.”

For the full story from InvestmentNews Daily, please click here

How Smaller Sized Broker-Dealers Can Survive blog update includes a look at smaller-sized brokerdealers and best strategies that can help them survive in an industry plagued by ‘the race to zero’ insofar as commission rates, ever-increasing compliance costs, and one that requires technology fluency in order to address a combination of needs and demands from institutional clients.

Below view is courtesy of extract from Nick Fera’s contributed column to the Sept 10 edition..

NEW YORK (TheStreet) — If you’re a small to mid-sized broker-dealer, you know your industry has seen significant consolidation in recent years. Let’s look at how you can survive in this environment.

Since the financial crisis, the U.S. broker-dealer sector has been a hotbed for mergers and acquisitions. A noticeable uptick in consolidation occurred between 2008 and 2010, coinciding (understandably) with the introduction of Dodd-Frank reforms.

The number of broker-dealer firms registered with the Financial Industry Regulatory Authority dropped to 4,040 by April 2015 from 4,578 in 2010, a nearly 12% decrease over five years. Most analysts and industry experts agree that there are two primary factors fueling this trend: shrinking margins and swelling compliance costs. provides a global directory of broker-dealers in more than 30 countries worldwide.

Small, mid-sized and specialty broker-dealers are at the center of this consolidation. Many of them lack the cash flow and technology to overcome today’s strict regulatory environment. Despite these dreary numbers, hope is not lost. Independent broker-dealers that have yet to merge or become acquisition targets still have options available to capitalize on their evolving industry.

Squeezing the Middle

Similar to the airline industry’s restructuring during the ’80s and ’90s, a handful of large players are eagerly snapping up regional and middle-market broker-dealers. Businesses including Cetera Financial, RCS Capital (RCAPGet Report) and AIG’s (AIGGet Report) AIG Advisor Group have grown their portfolios by purchasing firms that likely didn’t have the resources or client base to stay out of the red for years to come.

During and after the recent economic recovery, smaller brokers that did little to differentiate their service offerings (in terms of research, trade execution or asset coverage) or improve their operating cost structures began experiencing a downturn in activity. Business that didn’t shift to the bigger firms went instead to boutique shops that support a niche set of securities or focus heavily on research.

For better or for worse, this recent wave of consolidation has been a necessary chapter for the broker-dealer sector. The large serial acquirers have the budgets, staff and margins to compensate for the gaps that plague small and mid-sized firms. In volatile times (when losing a client or two could bring a broker-dealer down), mergers and acquisitions are enticing alternatives.

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Will BrokerDealer Top Cop Really Get Tough? Fiduciary or Not?

maryjowhite sec blog update profiling behind-the-scenes posturing as to whether the SEC might impose a new standard that imposes the concept of “fiduciary obligation” on brokerdealers is courtesy of extract from March 17 New York Times “SEC Chief May Toughen Rules For Brokers.” Below is the snapshot with credit to NYT reporter MICHAEL J. de la MERCED

The chairwoman of the Securities and Exchange Commission announced on Tuesday that she planned to explore setting a higher standard for brokers in dispensing investment advice, putting the agency in the middle of a potential fight between the Obama administration and the financial industry.

Speaking at a conference hosted by the Securities Industry and Financial Markets Association, one of Wall Street’s main trade groups, the chairwoman, Mary Jo White, expressed her personal support for setting up a so-called uniform standard of fiduciary duty.

Such a move would hold stockbrokers and brokerdealers to a fiduciary duty standard, under which they must put their clients’ interests ahead of their own. Registered investment advisers already fall under that higher bar, while brokers follow a looser “suitability” standard that requires them only to mind customers’ needs and appetite for financial risk.

“I believe the S.E.C. has an obligation” to create a uniform standard, Ms. White told the association’s conference.

Ms. White’s comments were her first public thoughts on the matter, coming months after the chairwoman promised to outline her position on the issue.

The S.E.C. has the authority — but no obligation — to create the new standard, thanks to a provision in the Dodd-Frank financial regulation overhaul. The Obama administration backed a similar initiative by the Labor Department to create a higher standard for brokers who oversee retirement investments.

A new standard from the commission would carry more weight, however, since it would encompass all brokers and not just those who oversee retirement accounts.

Behind the call for a tougher standard is concern that loose rules have potentially cost consumers billions of dollars each year. A memo from the White House that surfaced in January estimated that investors lost between $8 billion and $17 billion from their I.R.A.s last year because of a lack of protections.

To read the entire NYT story, please click here.