SEC Says to Finalize Fiduciary Rule Requirements Among Investment Advisers, Brokers

Jack Humphrey, Regulatory journalist
January 16, 2012 /

The US Securities and Exchange Commission will soon finalize its proposal to require investment advisers and brokers of a uniform fiduciary standard as required by the Dodd-Frank financial reform law, well past due its initially set date last year.

The SEC said it will do so after it acquires enough more data, which according to securities industry analysts, could put off the implementation of the proposed fiduciary standard by half a year. The fiduciary rule was initially said to be proposed in the second half of 2011.

SEC chairperson Mary Schapiro said in a letter to Republican U.S. Congressman Scott Garrett (New Jersey) that it will request the public for more data in an effort to analyze deeply the pros and cons of the proposed fiduciary standard.

Economists from the SEC have already begun looking into the data concerning the market for retail financial advice, which includes academic articles and surveys, Schapiro’s letter stated.

“It is our hope that commenters will provide information that will allow Commission staff to continue to analyze the various components of the market for retail financial advice,” Schapiro wrote.

The public will likely have 45 to 60 days to give its comments. The SEC will ask for another similar span of time to analyze the responses from different sectors, according to Lynn Turner, former SEC chief accountant.

Turner added that this may delay the agency’s publication of the proposal until the mid of 2012.

Under the existing fiduciary rule, investment advisers are only required to recommend investments that are “suitable,” based on the client’s age and tolerance of risk, among other factors.


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