Washington INsider

Washington INsiderblog

Mark Schoeff Jr. looks at what's really happening on Capitol Hill - and the upshot for advisers.

Nov 6, 2017, 2:48 PM EST

Finra reform getting traction in Washington

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By Mark Schoeff Jr.

In a Washington dominated by partisan battles over health care and tax reform, something much lower profile but perhaps more important to brokers may be gaining momentum: Finra reform.The Financial Industry Regulatory Authority Inc., the industry-funded broker-dealer self-regulatory organization, is getting a fair amount of attention in the capital, according to David Burton, senior fellow in economic policy at The Heritage Foundation. A recent House oversight hearing addressed interest in Finra reform, as did the Securities and Exchange Commission nominees at their Oct. 24 hearing. Mr. Burton, a leading Finra critic, has himself has kept a spotlight on Finra by hosting an event with Finra president and chief executive Robert Cook on Oct. 6 and an event on Nov. 3 featuring think tank experts, industry and investor advocates."Finra is much more on people's radar than it has ever been in the past," Mr. Burton said at the Nov. 3 Heritage... Read full post

Oct 23, 2017, 4:51 PM EST

Finra's fine money whets appetites of investor advocates, experts, industry representatives

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By Mark Schoeff Jr.

The $176.3 million in total fines Finra levied last year has mouths watering like a succulent burger coming off the grill. Investor advocates, members of Congress, scholars and industry representatives all want to take a bite.In the last couple of months, Finra has been pressed regarding what it does with fine proceeds. The industry-funded broker-dealer regulator's opacity in this area was highlighted in September in an in-depth InvestmentNews analysis of the Financial Industry Regulatory Authority Inc. Then it was brought up by lawmakers at a Finra oversight hearing conducting by a House Financial Services subcommittee. The topic also was raised earlier this month in an event at the Heritage Foundation featuring Finra president and chief executive Robert W. Cook.Not only is there an expanding chorus calling on Finra to better explain how it allocates its fine money, there also is a growing wish list of what it should do with its take.... Read full post

Jul 14, 2017, 1:48 PM EST

Best interest is in the eye of the beholder in debate over DOL fiduciary rule

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By Mark Schoeff Jr.

The term "best interest" is subjective it seems in the debate over the Labor Department's fiduciary rule. The phrase is used by both critics and supporters of the measure to describe what they're trying to do for the average investor.The latest example of the fluidity of the term was seen in a July 13 hearing of the House Financial Services Subcommittee on Capital Markets, Securities and Investments. Lawmakers on the panel debated draft legislation offered by Rep. Ann Wagner, R-Mo., that would kill the DOL rule and replace it with a regulation written by the Securities and Exchange Commission that would "establish standards of conduct for brokers and dealers that are in the best interest of their retail customers," according to the preamble of the measure. But wait, in my reporting on the partially implemented DOL rule, I've always described the regulation as "requiring financial advisers to act in the best interests of their clients... Read full post

Jun 1, 2017, 4:20 PM EST

As fiduciary debate slogs on, both sides will be dragged through the mud

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By Mark Schoeff Jr.

The endless debate over investment-advice standards will continue through at least the end of the year, thanks to the Labor Department's review of its fiduciary rule. As the conflict slogs ahead, an industry leader and some advisers worry that both sides will be dragged through the mud.Along the way, we'll have the umpteenth round of the fight over who is looking out for "Main Street" and who is doing the bidding of "Wall Street." That's a schism that concerns Blaine Aikin, executive chairman of Fi360, a fiduciary training and credentialing firm.He agreed with the Obama administration's efforts to couch the rule as helping Main Street investors because it helped get it across the finish line to finalization last year. But that effort came with a cost."In order to get the rule through, that's a strong card to play," Mr. Aikin said at Fi360's annual conference last month in Nashville. "But it does hurt our reputation. It does damage to... Read full post

May 8, 2017, 10:21 AM EST

Opponents of DOL fiduciary rule want SEC to modify suitability standard

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By Mark Schoeff Jr.

Some suspense surrounds the fate of the Department of Labor fiduciary rule. Among the cliffhangers: Will new Labor Secretary Alexander Acosta extend the delay of the regulation's implementation date beyond June 9? What part of the rule will be modified as a result of the reassessment called for by President Donald J. Trump? Or will it be repealed altogether? If it is repealed, will the Securities and Exchange Commission step into the void and propose its own uniform fiduciary rule for retail investment advice?Here's a question that's not so suspenseful: What kind of new fiduciary standard is on the wish list of industry opponents of the DOL rule? Spoiler alert: They don't want one. They want a modification of the suitability standard that governs brokers' sales of investment products, and they want it to focus on disclosure.The Investment Company Institute, which represents the mutual fund industry, is the latest trade association to... Read full post

Apr 28, 2017, 2:55 PM EST

The SEC would have to jump through hoops to get approval for its own fiduciary rule

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By Mark Schoeff Jr.

Republican lawmakers and financial industry opponents of the Labor Department's fiduciary rule repeatedly say — almost like a mantra — that the Securities and Exchange Commission is the place where such a regulation should originate.The DOL rule, whose implementation has been delayed until June 9, would require financial advisers to act in the best interests of their clients in retirement accounts. But the SEC has jurisdiction over securities regulation, and if it sets advice standards, they would apply to all retail investment accounts, DOL-rule foes argue.Their preferred starting place for a fiduciary rule would be codified in the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act, a nearly 600-page bill that would overhaul the Dodd-Frank financial reform law. The measure, written by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, likely will be approved... Read full post

Feb 27, 2017, 2:39 PM EST

Fate of fiduciary rule rides on regulators' political savvy

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By Mark Schoeff Jr.

Politics and policy are inextricably linked in Washington. The former is always required to make any substantive advances in the latter. Regulation of financial advice is primary example — and two recent developments show why.On Friday, Securities and Exchange Commission Acting Chairman Michael Piwowar made his first major address while serving in his temporary position. A former Republican aide on the Senate Banking Committee, Mr. Piwowar showed that he has a pretty good grasp of politics.First, the theme of his speech was the "forgotten investor." The term is a variation the "forgotten man and woman" to whom President Donald Trump refers frequently when framing his governing approach. Using the "forgotten investor" trope helped tie Mr. Piwowar's vision for the SEC to the new Republican administration. My guess is that's what Mr. Piwowar intended. Despite the ephemeral nature of his "acting" title, Mr. Piwowar has taken action... Read full post

Feb 16, 2017, 5:09 PM EST

Awaiting new Labor secretary, staff takes on larger role in fiduciary rule's fate

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By Mark Schoeff Jr.

In Washington, it is often said that personnel is policy. When it comes to the Labor Department's fiduciary rule, the lack of Trump administration appointees at the agency is adding to uncertainty surrounding the rule.Fast-food executvie Andrew Puzder withdrew Wednesday as President Donald Trump's nominee for Labor secretary less than 24 hours before his long-delayed hearing was to be held before the Senate Health, Education, Labor and Pensions Committee. On Thursday, Mr. Trump announced his new nominee, Alexander Acosta, dean of the Florida International University law school and a former U.S. Attorney for the Southern District of Florida. His confirmation process is not likely to conclude until well into March. While the new administration tries to find its footing, the April 10 implementation date for the DOL rule, which raises investment advice standards in retirement accounts, is bearing down. A DOL proposal to delay the... Read full post

Feb 6, 2017, 6:39 PM EST

What's next for the DOL fiduciary rule

By Mark Schoeff Jr.

It's fitting that the drama surrounding a Labor Department investment advice rule continues to play out this week and perhaps for months to come just like a reality television show, a genre perfected by President Donald Trump.The presidential memo to DOL that Mr. Trump signed last week instructed the agency to review the regulation, which would require financial advisers to act in the best interests of their clients in retirement accounts. It calls on DOL to assess, among other things, whether the rule prevents retirement savers from accessing advice or threatens financial firms with a flurry of lawsuits — two arguments the industry often makes in attacking the rule. If the agency finds that harm is being done to investors or firms, it can then modify or replace the measure through a rulemaking process.What Mr. Trump's memo does not do is delay the rule's April 10 implementation date. That step must be taken by Acting DOL... Read full post

Jan 31, 2017, 11:56 AM EST

DOL fiduciary rule not yet caught up in Trump maelstrom

By Mark Schoeff Jr.

President Donald Trump has been the disrupter that he promised to be.He is signing executive orders at a pace that makes former President Obama look desultory. His latest ones — on immigration and the makeup of the National Security Council — have sparked nationwide protests and bipartisan consternation on Capitol Hill. But what Mr. Trump has not touched — so far — in this maelstrom is a Labor Department regulation that would raise investment-advice standards for retirement accounts.When Mr. Trump was inaugurated, the financial industry had high hopes that delaying the DOL rule would be one of the first items that the new president addressed. It's now Day 10, and we haven't seen anything.Last week at the Financial Services Institute annual conference in San Francisco, FSI president and chief executive Dale Brown emphasized that FSI had been in contact with the Trump transition team to ensure that the DOL rule... Read full post

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