The Securities and Exchange Commission will seek further public comments and data before proposing any rule to impose a fiduciary duty on broker-dealers, according to a letter from SEC Chairman Mary Schapiro to Rep. Scott Garrett (R - NJ), Chairman of the House Subcommittee on Capital Markets and Government Sponsored Entities (Jan. 10, 2012). SEC staff, including economists within the Division of Risk, Strategy, and Financial Innovation, are drafting a public request for information to obtain data specific to the provision of retail financial advice and the regulatory alternatives. If the SEC does move forward with possible regulatory action, the SEC will follow its usual practice of including its economic analysis for review and public comment as part of any proposal. Schapiro's letter responded to a December 21 inquiry from Garrett.
The SEC in January 2011 released a staff study recommending the adoption of rules imposing a fiduciary duty for broker-dealers providing personalized investment advice and recommendations about securities to retail customers. The study was required by Section 913 of the Dodd-Frank Act, which also authorized the adoption of such rules. Section 913 did not, however, require the SEC to take any action, beyond its submission of the study. The SEC recently revised its Dodd-Frank implementation plan to indicate that the date of a rule proposal is still to be determined; earlier versions of the plan contemplated a rule proposal in 2011 or the first half of 2012.
I have obtained a copy of Schapiro's letter and placed it online at
The SEC's Dodd-Frank implementation plan is at
For my post on the SEC's study under Section 913, see
John M. Baker <JMB@...
Stradley Ronon Stevens & Young, LLP http://www.stradley.com
1250 Connecticut Avenue, NW, Suite 500
Washington, DC 20036
FundLaw Listowner http://groups.yahoo.com/group/fundlaw
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