SEC, DOL Working Together on Advisers’ Conduct Standards

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By Carmen Castro-Pagan

The SEC and the Labor Department are working “closely and constructively” to implement appropriate standards of conduct for financial professionals who advise investors, SEC Chairman Jay Clayton told the Senate Banking Committee Sept. 26.

The Securities and Exchange Commission standards should be “clear and comprehensible to the average investor,” consistent across retirement and non-retirement assets, and coordinated with the DOL and state insurance regulators, Clayton said.

Clayton said financial professionals have taken different actions to comply with the DOL’s fiduciary rule, which requires financial professionals to act in their clients’ best interest when giving retirement investment advice. Parts of the rule went into effect June 9. The Trump administration has now delayed portions of the rule on several occasions. The DOL recently proposed to delay the rule’s exemptions until July 2019. The rule is under review by the agency.

Clayton outlined several things that the financial services industry has already done to comply with the DOL rule. For example, some broker-dealers are increasing compliance resources and efforts, including disclosure related to costs and individual retirement account rollover recommendations, he said. Many companies are re-evaluating and changing the products they offer investors, focusing particularly on products that would comply with the rule’s best-interest-contract exemption. Still others are increasing the use of robo-advisers, he added.

In addition, Clayton said many mutual fund companies are assessing different approaches to accommodate broker-dealers’ efforts to level compensation across similar types of products in response to the DOL rule. These companies have started issuing “clean shares” that don’t carry any sales fees and “transaction shares” that have uniform sales charges across all fund categories, he said.

Since taking the helm of the SEC, Clayton has been clear that he intends to work with the DOL on a fiduciary standard. In June 2017, the SEC announced it was seeking public comments on standards of conduct for investment advisers and broker-dealers.

So far, the SEC has received more than 150 comments from investors and the industry, Clayton said.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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