FINSUM + Magnifi: Brokers Need to Watch for Heavy New SEC Enforcement
(March 2021)
Brokers, those that are dually-registered, pretty much anyone covered by Reg BI, you should be on the lookout for a pending crackdown by the new Biden administration-led SEC. Industry insiders and former regulators are warning that enforcement of the new Reg BI rule is likely to be strict. Former chief of FINRA, Susan Schroeder, says that enforcement is likely to start soon (i.e. this year) and may be “very aggressive”. According to Schroeder, “Early enforcement actions will be predicated on things like policies and procedures, but by past SEC standards, that is very aggressive”, and if the enforcement actions “are predicated on things like inadequate training or failures to have policies and procedures, from a legal theory perspective, that’s aggressive”.
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FINSUM + Magnifi: Why Reg BI Will Get Scrapped Within a Year
(September 2020)
Make no mistake about it. If you were to make odds on whether Reg BI will still be in place one year from today, most would put the chance at less than 50%. That is a pretty dramatic reality for the SEC’s centerpiece legislation of the last half decade. The reason why is that the Democratic party and Joe Biden have made it very clear that they want to pursue a more robust fiduciary standard, and they are currently ahead in the polls. If Biden wins the election, they have many avenues to do this, such as by replacing the head of the SEC, or by passing legislation that alters the Dodd-Frank Act to require a true fiduciary component.
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FINSUM + Magnifi: Morningstar Says Plans are in Motion for Overturn of Reg BI
(September 2020)
2020 has seen both the implementation of the SEC’s new Reg BI rule as well as the introduction of a new DOL Fiduciary Rule proposal. While both have faced opposition on all sides, it was uniformly less intense than the scorn the first fiduciary rule received. That said, Morningstar is reporting that plans are underway to scrap the new Reg BI rule, which only became official in June. More specifically, Biden is planning to scrap both rules if he takes office. That is obviously still a very big if, but the process is quite clear. Biden would appoint a new head of the SEC, who would then scrap the rule. Or, the Dodd-Frank act could be amended to make clear a full fiduciary rule needs to be in place.
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FINSUM + Magnifi: Why the New Fiduciary Rule is a False Victory for Brokers
(September 2020)
There has been a lot of consternation about the new DOL fiduciary rule. Some of it from brokers, more of it from fiduciaries and investor protection groups. What has been much less covered, however, is the insidious rise of state level fiduciary rules that are threatening to create a national patchwork of regulations that could isolate the industry into little islands. Therefore, the introduction last week of a new fiduciary rule for Massachusetts is a big deal. It comes on the heels of nearly a dozen other state fiduciary rule proposals and highlights that many states are unsatisfied with the new federal rule and still want to take matters into their own hands.
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