The Securities Industry and Financial Markets Association (SIFMA) is offering a dissenting opinion regarding New Jersey’s proposed rule to create a state fiduciary standard.
“To best protect investors and avoid investor confusion, the optimal approach is to defer to the uniform, nationwide, heightened, best interest standard for broker-dealers which is embodied in the SEC’s now final Reg BI,” SIFMA officials wrote in their letter to the New Jersey Bureau of Securities. “A state-by-state approach, on the other hand, would result in an uneven patchwork of laws that would be duplicative of, different than, and possibly in conflict with federal standards. It would also heighten investor confusion. We urge the Bureau to pause its rulemaking process, review Reg BI and reevaluate its proposal before deciding whether it is necessary to proceed with an additional state regulation.”
The correspondence also addressed potential broader negative consequences for the state in the wake of its industry footprint.
“The finance and insurance industry has roughly 200,000 employees in the state of New Jersey and accounts for almost 5 percent of all employment in the state,” the letter stated. “Every dollar spent in the securities industry in New Jersey generates an additional $1.22 for the state economy and every job in the securities industry generates an additional 1.34 jobs statewide.”
It is the SIFMA’s position the plan would represent a fundamental change in the way the securities sector operates in the state and would fundamentally alter its relationship with millions of New Jersey investors.