White says SEC is moving on fiduciary but other rules to come first

Chief securities regulator says crowdfunding on the frontburner, sees rule in the fall

Jul 30, 2013 @ 3:15 pm

By Mark Schoeff Jr.

+ Zoom
(Photo: Bloomberg News)

Securities and Exchange Commission Chairman Mary Jo White told lawmakers today that she wants the agency to decide “as quickly as we can” whether to propose a rule to raise investment advice standards for brokers.

“That's something we are focused on, but we obviously have a very full plate of mandatory rule makings as well,” Ms. White said in response to a question from Sen. Kay Hagan, D-N.C., during testimony before the Senate Banking Committee. “It's very important to me that we get to wherever we're going on that as quickly as we can.”

Ms. White may have chosen to give herself some wiggle room on fiduciary duty because the controversial issue could split the five-member commission. The SEC is currently conducting a cost-benefit analysis of a potential rule. The comment period for a data request for the study ended July 5.

“It hasn't been a front burner issue yet,” SEC Commissioner Daniel Gallagher said in a recent interview. “It will be. We really need to decide, based on what we've seen, whether it makes sense to move forward.”

A rule that would impose a uniform fiduciary standard for retail investment advice was authorized by the Dodd-Frank financial reform law but not required.

Ms. White promised lawmakers that several regulatory items — including a measure approved that eases securities registration for small companies — were “on the front burner.”

She was pressed by Sen. Mark Warner, D-Va., to whether the SEC would promulgate regulations for crowdfunding, a process in which companies can raise capital online in small amounts from average investors who don't meet the net worth and income requirements to be accredited.

Mr. Warner said that he had met with startup firms throughout Virginia, especially in rural areas, that need the flexibility to connect with investors that crowdfunding would provide.

“This really could be transformative,” Mr. Warner said. “There's a nascent industry waiting for the regulations to get out.”

Ms. White was hesitant to provide a specific timeline.

“I've been describing multiple front burners,” Ms. White said. “The crowdfunding rule making is on one of those front burners. I define the front burner to be sometime into the fall.”

State regulators have raised concerns that crowdfunding could harm small investors. Last week, Massachusetts Secretary of the Commonwealth William Galvin formed a special unit within the state's securities division to monitor crowdfunding websites.

Mr. Warner acknowledged that “there will be mistakes made” but added that that there also will be “an opportunity for the Internet to self-police a bit and call out bad actors.”

Ms. White said that the SEC is coordinating with the Financial Industry Regulatory Authority Inc., which would regulate crowdfunding portals.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Ed Slott: Tax strategies to help clients take advantage of market declines

When the markets decline or are volatile, it is an opportunity to put a few retirement savings strategies to work, according to Ed Slott, founder of Ed Slott's Elite IRA Advisor Group.

Latest news & opinion

Will Jeffrey Gundlach's Trump-like approach on Twitter work in financial services?

The DoubleLine CEO's attacks on Wall Street Journal reporters is igniting a discussion on what's fair game on social media.

Fidelity wins arb case against wine mogul but earns a rebuke from Finra

In the case of investor Peter Deutsch, Fidelity doesn't have to pay any compensation, but regulator said firm put its interests ahead of his.

Plaintiffs win in Tibble vs. Edison 401(k) fee case

After a decade of activity around the lawsuit, including a hearing before the U.S. Supreme Court, judge rules a prudent fiduciary would have invested in institutional shares.

Advisers get more breathing room to make Form ADV changes

RIAs can enter '0' in some new parts of the document before their annual filing next year.

Since banking scandal, Wells Fargo advisers with more than $19.2 billion leave firm

Despite a trying year, the firm has said it will sweeten signing bonuses for veteran advisers.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print