Fiduciary duty: Between a regulatory rock and a political hard place

JUNE 2010:

House-Senate negotiators agree to language in the Dodd-Frank Wall Street Reform and Consumer Protection Act that gives the Securities and Exchange Commission the authority to draft a universal fiduciary-duty rule after conducting a study of regulatory options.

JULY 2010:

President Barack Obama signs Dodd-Frank Act into law.

AUGUST 2010:

The SEC receives more than 3,000 comment letters on the fiduciary-duty study.

JANUARY 2011:

The SEC submits a report to Congress recommending that the commission proceed with a fiduciary-duty rule harmonizing investment adviser and broker regulations. Two Republican commissioners dissent, saying that the document lacks the economic analysis to justify its conclusion.

MARCH 2011:

Republicans on the House Financial Services Committee urge the SEC to halt its efforts on fiduciary duty because it “has not identified and defined clear problems that would justify a rule making.”

JULY 2011:

The Securities Industry and Financial Markets Association submits its own fiduciary framework to the SEC, urging the commission to create a new fiduciary standard that applies to investment advisers and brokers equally.

JULY 2011:

The U.S. Court of Appeals for the District of Columbia Circuit vacates an SEC proxy-access rule, ruling that the com- mission failed to conduct a proper cost-benefit analysis. The court's reasoning is seen as affecting the fiduciary-duty question directly.

SEPTEMBER 2011:

Republicans on the House Financial Services Committee call on the SEC to conduct a cost-benefit analysis before issuing a fiduciary-duty rule proposal.

JANUARY 2012:

The SEC rule-making calendar doesn't put fiduciary duty on a specific timetable but lists it as “to be determined.” SEC Chairman Mary Schapiro tells House Financial Services Committee Republicans that the commission will conduct a cost-benefit analysis of a fiduciary-duty rule.

MARCH 2012:

Organizations supporting the fiduciary-duty rule submit their own framework to the SEC. They disagree with SIFMA, saying that the SEC doesn't need to create a new fiduciary standard but that it can extend the Investment Advisers Act of 1940 to brokers while clarifying how it applies to broker conduct.

SEPTEMBER 2012:

SEC members are considering a draft data request for the cost-benefit analysis but haven't approved its release. John Bogle, founder and former chief executive of The Vanguard Group Inc., Knut Rostad, president of the Institute for the Fiduciary Standard, and Tamar Frankel, professor of law at Boston University, present Ms. Schapiro with the Fiduciary Declaration, which calls on the SEC to move forward with a fiduciary-duty regulation.