At a recent conference, Acting SEC Chairman Michael Piwowar described the DOL Fiduciary Rule as “highly political” and said the rule will enable trial lawyers to increase their profits. Piwowar, according to a Wall Street Journal report, said that if the SEC were to promulgate its own fiduciary rule the focus should be much narrower than the DOL’s rule.
The Department of Labor has proposed to delay the rule’s effective date by 60 days to conduct a review as requested by the Trump Administration in February. According to reports, the effective date is likely to be extended since the DOL is seeking public comments on the rule-delay proposal and will also seek comments on its responses to the White House’s February order. Meanwhile, the industry continues preparations to comply with the rule. The SEC’s Division of Investment Management recently provided answers to certain questions related to its guidance on mutual fund fee structures in light of the Fiduciary Rule and disclosure matters associated with its no-action letter to Capital Group Inc. The SEC staff addressed questions regarding how to disclose variations in sales loads and different intermediaries in prospectus appendices, and the fund filings necessary to establish a class of “Clean Shares.”
At the recent annual “SEC Speaks” conference in Washington, Piwowar and Commissioner Kara Stein delivered remarks on the markets, trends and the agency’s past-year initiatives and future priorities. The conference occurred amid political uncertainty, three commissioner vacancies, and as the agency awaits confirmation of a new chairman. In his speech titled “Remembering the Forgotten Investor,” Piwowar focused on the effects of regulation on the “men and women of our country whom securities regulation is meant to serve and protect but so often has not.” He specifically highlighted disclosure provisions, the “accredited investor” threshold, and increased civil monetary penalties against corporations. “The Dodd-Frank Act is rife with examples of burdens ultimately borne by the Forgotten Investor through shareholder money and company resources being expended to provide non-material disclosures—the conflict minerals, pay ratio, and resource extraction provisions to name a few,” Piwowar said. He noted that he has directed SEC staff to begin reconsideration of the conflict minerals rule and pay-ratio rule and that Congress and President Trump have vacated the SEC’s rule requiring resource extraction disclosures. Commissioner Stein’s speech focused on the rapid changes in the markets, including the rise of robo-advisers, exchange-traded products and electronic trading. She noted that while the SEC has undertaken projects to address the mini flash crashes and flash rallies, much more needs to be done. “We need to assess whether our current structure is sufficient to withstand the changes we face,” she said.