Piwowar: Comments will be critical in shaping SEC advice rule

Departing commissioner doesn't foresee final vote on proposal until 2019

Jun 29, 2018 @ 1:45 pm

By Mark Schoeff Jr.

Securities and Exchange Commission member Michael Piwowar said Friday that public comments will be crucial in shaping the agency's reform of investment advice standards.

In April, the SEC released a package of proposals designed to raise client-care requirements for brokers while clarifying for investors the different standards that brokers and investment advisers must meet. The comment deadline is Aug. 7.

Mr. Piwowar, a Republican commissioner who will depart his role July 7, said the agency already has received many comments and expects many more. That input will determine how a final rule package turns out.

"A lot of it's going to bear out with the comment period," Mr. Piwowar told reporters after a valedictory event at the U.S. Chamber of Commerce in Washington. "We always take into account comments, but this one in particular, coming in sooner rather than later is going to be helpful to the staff and to the commission."

Many investor advocacy groups have asked the SEC to delay the comment period until after the publication of the results of investor testing related to disclosures in the proposal. SEC chairman Jay Clayton has not indicated he will push back the deadline.

Earlier this week, several organizations mounted a campaign to encourage investment advisers to write comment letters to the SEC pointing out the differences between advisers, who must act as fiduciaries, and brokers, who are held to a suitability standard. Under the SEC proposal, brokers would be governed by a new best-interest standard.

Mr. Piwowar said the agency will take a long time to review the comments.

"Staff is going to be very deliberative going through the comments," he said. "The staff and the commissioners are going to take a lot of meetings this fall on it. From there, a lot depends on the comments we get."

The time line for a final advice rules is impossible to predict, Mr. Piwowar said.

For one thing, his replacement will have to get up to speed on the package. The Senate Banking Committee has set a July 24 hearing for Elad Roisman, a committee aide who has been nominated by President Donald J. Trump to fill Mr. Piwowar's seat.

The five-member commission will experience more turnover later this year. Democratic commissioner Kara Stein must depart by December.

The personnel changes, along with the complexity of the advice proposal, create uncertainty about whether the agency can settle on a final rule anytime soon.

"I don't see the commission voting on this until next year," Mr. Piwowar said. "By then, it's impossible to predict where people are going to be."

The commission voted 4-1 to put the proposal out for public comment. But even the "yes" votes of Mr. Piwowar and his Republican colleague Hester Peirce came with criticisms of parts of the package.

But he said he and Ms. Peirce support the SEC's advancing a proposal and taking the lead on investment advice reform from the Labor Department, whose fiduciary rule for retirement accounts recently died in court.

"We're strong supporters of putting something out there to move the conversation from the Department of Labor to the SEC," he said. "That, in and of itself, was huge."


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