05 July 2013

SIFMA submits cost estimates to SEC on fiduciary rulemaking

SIFMA released its response to a data request by the Securities and Exchange Commission (SEC) to help inform the agency's cost-benefit analysis of a uniform fiduciary standard for broker-dealers and investment advisers under Section 913 of the Dodd-Frank Act.

"SIFMA remains strongly supportive of a uniform fiduciary standard for broker-dealers and investment advisers when providing personalised investment advice about securities to individual retail clients" said Ira Hammerman, senior managing director and general counsel. "In our effort to be most helpful and responsive to the SEC, we surveyed our member firms to collect data and information about the costs of creating and updating disclosures, systems and procedures to implement a uniform fiduciary standard. We also suggest the types of data and information the SEC should consider in their cost-benefit analysis. While the costs projected by our members clearly are not insignificant, these are costs our industry is generally willing to bear in order to benefit retail clients with a fiduciary standard."

The letter reiterates SIFMA's long-held support for a uniform fiduciary standard of conduct, as well as its support for broader harmonisation of broker-dealer and investment adviser regulations.

IFMA's letter also raises concerns about potential rulemaking by the Department of Labor to redefine fiduciary expansively under the Employee Retirement Income Security Act. SIFMA points out that the DOL's proposal could conflict with the SEC's potential rulemaking under Section 913, and could otherwise have a broad and negative impact on small investors' access to cost-effective advice in IRA accounts.

In response to the SEC's explicit request, SIFMA's letter also details and clarifies why simply overlaying the Advisers Act fiduciary duty onto broker-dealers would create a high risk of confusion and misapplication, and will negatively impact client choice and access to the products and services that best suit their needs. SIFMA reiterated its strong opposition to this approach.

Full letter

© SIFMA - Securities Industry and Financial Markets Association