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April 23, 2012 at 09:37 AM
The Securities and Exchange Commission (SEC) may likely issue a concept release this summer regarding putting brokers under a fiduciary mandate, Andrew “Buddy” Donohue, the former director of the SEC’s Division of Investment Management, said Monday.
Speaking at the Investment Management Consultants Association (IMCA) annual conference in National Harbor, Md., just outside Washington, Donohue—who’s now with the law firm Morgan, Lewis & Bockius—said that while the concept release will likely be issued this year, an actual rule proposal on a fiduciary standard for brokers this year is more doubtful. He noted the fiduciary debate is a politically charged issue internally at the SEC.
Donohue explained to AdvisorOne after his remarks that the concept release on fiduciary would list “a lot of questions” the commission would like answered, but it would not provide “details on which way the commission is leaning” regarding the fiduciary rule. The concept release would likely come after the SEC completed its cost/benefit analysis on the fiduciary proposal, he told AdvisorOne, but the concept release could also ask for more cost/benefit input. Another possibility, he said, was that the SEC would hold a roundtable after the concept release went out.
Steven Stone, also with Morgan, Lewis & Bockius, who sat on the same panel as Dononue titled, “Identifying and Adapting to Regulatory Change,” said the “wildcard now” is “how the SEC articulates the fiduciary standard of care. It’s unclear what approach the SEC is going to take.”
Another wildcard issue now is when House Financial Services Chairman Spencer Bachus plans to reintroduce his draft bill calling for a self-regulatory organization (SRO) to examine advisors. Sources tell AdvisorOne it will be soon. “If there is an SRO for advisors and FINRA is designated as that SRO, this will have a dramatic impact on your business,” Stone told IMCA members, 70% of which hail from brokerage firms.
