SIFMA says it supports standard of conduct for brokers in comments to SEC

SIFMA is in favor of implementing standards for brokers giving customers investment advice, the association that represents the U.S. securities industry recently said in response to the Securities and Exchange Commission’s request for public comments on the standards of conduct for investment advisers and broker-dealers.

“SIFMA has long supported the establishment of a best interest standard of conduct for brokers when making recommendations about securities to retail customers,” said Kenneth E. Bentsen, Jr., SIFMA president and CEO.

SIFMA’s letter also highlighted its support for coordination between the SEC and the Department of Labor (DOL), and the need to create one long-term solution for all retail investors.

The DOL’s ongoing examination of its fiduciary rule, which would require financial professionals to act in the best interest of their clients when providing retirement advice, could have significant effects on retail investors, the SEC said, as well as the capital markets. Many of the issues also fall under the SEC’s domain of protecting investors, the commission has said.

“As the primary regulator, the SEC should take the lead and work with FINRA to develop a heightened standard that builds upon the existing broker-dealer regulatory regime, and encompasses a duty of loyalty, a duty of care and enhanced up-front disclosures,” Bentsen said. “The SEC has always been the appropriate regulator to address this, for all retail brokerage accounts, something SIFMA and several Congresses have long supported.”

SIFMA’s letter comments on the feasibility of several regulatory options being evaluated by the SEC, including more detailed disclosures to reduce investor confusion, and developing a uniform standard of conduct for broker-dealers and investment advisers when providing investment advice to retail investors.

SIFMA also asked the SEC to encourage the DOL to extend the Jan. 1, 2018 applicability date of the provisions in the DOL’s Best Interest Contract Exemption and Principal Transactions Exemption.

“We look forward to working with the SEC on a solution that promotes investor protection and restores product choice and access to advice for America’s retirement savers without raising costs,” Bentsen added.