The House of Representatives approved legislation Wednesday that effectively would kill the Securities and Exchange Commission's recently approved advice reform package of regulations.
The measure by House Financial Services Committee chairwoman Maxine Waters, D-Calif. —
an amendment, among several others, to a $47 billion financial services and general government funding bill — passed largely along party lines, 227-200, with Democrats supporting it.
The legislation
may not survive in the Republican-majority Senate. In addition, the Trump administration has threated to veto the overall appropriations bill.
Ms. Waters' amendment would prohibit the SEC from using any of its spending authority from Congress to "implement, administer, enforce or publicize" its
final advice reform package. That package was
approved 3-1 by the agency in early June and includes the broker-dealer conduct standard Regulation Best Interest, the Form CRS client disclosure rule, an interpretation of the broker-dealer exclusion from adviser regulations and an interpretation of the standard of conduct for investment advisers.
Ms. Waters and many other Democratic lawmakers have criticized the SEC rule package as being too weak to protect investors from broker-dealer conflicts of interest.
"Rewriting this rule will be a top priority in the next Democratic administration," Barbara Roper, director of investor protection at the Consumer Federation of America, tweeted Tuesday. Ms. Waters' "amendment to hit the pause button on Reg BI until after the election would spare firms unnecessary compliance costs and protect investors from a bad rule."
Congressional Republicans and most of the financial services industry support the SEC reforms.
"Reg BI is the most comprehensive enhancement of standard-of-conduct rules governing broker-dealers since the enactment of the Securities Exchange Act of 1934," Securities Industry and Financial Markets Association chief executive Kenneth E. Bentsen Jr. said in a statement. "It makes no sense to halt the orderly implementation of this important new set of regulations that would provide strong investor and consumer protections for 43 million households."
The Senate has not yet begun its appropriations process. The House and Senate would have to reconcile their spending bills by the end of September in order to avoid a government shutdown. Around the same time, House-Senate deliberation over raising the debt ceiling could complicate negotiations. But in recent years, the Senate has resisted attaching policy riders like Ms. Waters' SEC restrictions to appropriations bills.
