The Fifth Circuit Court of Appeals’ decision to strike down the Department of Labor’s fiduciary rule has not affected the Securities and Exchange Commission’s approach to setting a best interest standard for broker/dealers and investment advisors, Chairman Jay Clayton said, speaking at SIFMA’s C&L Annual Seminar on Monday morning. The sooner the agency can propose its standard, the better, he said.
“I’m not sitting on this,” Clayton said. “As far as I’m concerned, we’re moving forward.”
Clayton used this example to describe his approach to crafting a best interest rule: “Ms. Smith has a 401(k); she bought an annuity, and she has a brokerage account that has a few stocks in it. Her relationship with her financial professional has at least five regulators: state securities regulators, state insurance regulators, FINRA, the DOL and the SEC. That assumes that that financial relationship is not in a bank. If it’s in a bank, add bank regulators on top of that. And you still haven’t gotten to state attorneys general. That is, I think by any measure, too many different standards to have to comply towards.”
Clayton has made it a priority to get that number of standards down.
“I would like the SEC’s action in this area to be the focal point around which people say, ‘yes, that’s how we should look at the relationship. That’s the basis on which you should have to demonstrate compliance.’ That is the objective.”
