Waters amendment to kill Reg BI faces new hurdle

Waters amendment to kill Reg BI faces new hurdle
The policy rider, which passed the House largely along party lines, was not included in a budget agreement that requires any changes be approved by both Republicans and Democrats.
JUL 24, 2019

A federal budget agreement earlier this week puts a high hurdle in front of legislation that would effectively kill the Securities and Exchange Commission's recently approved investment advice reform package. Last month, the House approved an amendment to a financial services spending bill that would prevent the SEC from funding the implementation of its new rules. But the budget pact between the White House and congressional leaders includes a stipulation that prevents "poison pills, additional new riders … or any non-appropriations measures" in government funding bills that must be passed this fall unless House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Mitch McConnell, R-Ky., the two minority-party leaders in each chamber and President Donald J. Trump all agree to them. The SEC's rules, the centerpiece of which is Regulation Best Interest to raise the broker advice standard, have created a partisan split in Congress. House Financial Services chairwoman Maxine Waters, D-Calif., has been a harsh critic of Reg BI, as it's known, and wrote the amendment to kill it. Republicans on the Senate Banking Committee praised the SEC's new investment advice rules in a letter last week. Presumably, if the GOP sticks together in opposing Ms. Waters' amendment, known as a policy rider, it won't be included in the final financial services appropriations bill this fall. "Reg BI is the most significant investor protection enhancement since 1934," Christopher Iacovella, chief executive of the American Securities Association, said in a statement. "Members on both sides of the aisle should resist any attempt by politically motivated special interest groups to weaken this historic investor protection rule." Investor advocates, however, criticize the new SEC rules as being too weak to curb broker-dealer practices that lead to conflicted advice. Because the federal appropriations process often faces twists and turns as Congress attempts to avoid a government shutdown at the end of its fiscal year in September, some opponents of the new SEC rules remain hopeful. "As far as we see it, it's still a live issue, and [Ms. Waters'] policy rider could still be adopted," said Micah Hauptman, financial services counsel at the Consumer Federation of America. A spokesperson for Ms. Waters was not immediately available for comment.

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