US chairman of SEC vows to go ahead with version of Fiduciary Rule

Days after a US federal appeals court ruled that the Department of Labor had “overreached” its powers in its establishment of its so-called Fiduciary Rule, the chairman of another US regulatory body, the Securities and Exchange Commission, has told an industry audience of US securities industry representatives in Orlando, Florida that the SEC’s plans to release its own fiduciary legislation were unchanged. 

The Fifth Circuit Court of Appeals ruling “hasn’t affected the way I’m approaching this” fiduciary rulemaking at the SEC, Clayton was quoted as telling a question-and-answer session at the Securities Industry and Financial Markets Association’s annual compliance conference, according to ThinkAdvisor.com, a US trade publication, and other US news reports.

Asked how soon the agency might be expected to produce its own fiduciary proposal, and whether it might be “soon”, Clayton responded: “Soon is fair”, the publication quoted him as saying.

“From my perspective, the sooner the better. I’m not sitting on this.”

As reported, last week’s ruling that the DOL’s Fiduciary Rule – a major piece of Obama-era legislation aimed at ensuring US retirement advisers give un-conflicted advice when recommending products – was widely seen to have created fresh uncertainty for such advisers and their providers across the country.

The 2-1 decision was the latest in a series of setbacks for the Fiduciary Rule since Donald Trump was elected president in 2016, on a platform of campaign promises that included getting rid of a number of regulations that companies and business groups argued were too burdensome, and which he said would make financial advice and investment products too expensive for lower-income Americans.

By the weekend, US industry observers were suggesting that the Fiduciary Rule battle in the US remains far from over, citing at least one other, earlier key circuit court decision that took the opposing view, which they said could see the entire matter heading to the Supreme Court – leaving US retirement product brokers, advisers and product providers having in the meantime to chart a path through an uncertain regulatory landscape.

At the time Trump took office in January, 2017 and set about delaying the implementation of the Fiduciary rule, the US retirement products and advice industry was already well down the road in terms of in preparing to adopt it, which the Labor Department had estimated would cost the industry US$31bn, and some said could potentially exceed that amount.

On Friday evening, the Reuters news agency quoted the head of Bank of America’s Merrill Lynch wealth management operation, Andy Sieg, as saying that it remained committed to its already-stated vow of adopting the “clients’ best interest” regulatory approach, in spite of the appellate court decision, citing an “internal memo” Reuters said had been sent to the company’s more than 14,000 US brokers.

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