SEC's Mary Jo White's top priority: uniform fiduciary standard

Bloomberg News

Securities and Exchange Commission Chairman Mary Jo White said Friday that she is pushing the commission to make a decision on whether to propose a regulation that would raise investment advice standards for brokers.

"We will intensify our consideration of the question of the role and duties of investment advisers and broker-dealers, with the goal of enhancing investor protection," Ms. White said at the SEC Speaks conference in Washington sponsored by the Practising Law Institute.

In a meeting with reporters after her remarks, Ms. White said that she wants the five SEC commissioners to come to a conclusion on whether to implement a uniform fiduciary standard for investment advice and to decide whether to harmonize regulations that govern investment advisers and brokers.

The Dodd-Frank financial reform law gave the SEC the authority to promulgate a regulation that would require that brokers who provide retail investment advice must always act in the best interests of a client — the standard that investment advisers already meet. Brokers are held to a suitability standard when they sell investment products.

The SEC is conducting a cost-benefit analysis of a potential uniform-fiduciary-duty rule but has not indicated whether it will advance a proposal.

"The threshold issue is whether to proceed and what to proceed with, if so," Ms. White told reporters after her speech. "It's a primary, immediate focus."

Ms. White declined to reveal her own position on a uniform fiduciary standard.

"I'm not going to comment on that here," Ms. White said. "I have said, and I firmly believe, that it's a very high priority to make that decision, and it's something I have given a high priority to within the agency."

Three of the five SEC commissioners would have to support a rule proposal for it to move forward for public comment.

In her speech, Ms. White said that the SEC also will increase its oversight of broker-dealers "with initiatives that will strengthen and enhance their capital and liquidity, as well as providing more robust protections and safeguards for customer assets."

This year, the SEC also will step up its monitoring of asset management companies for potential risks they pose to the financial markets.

"I asked the [Division of Investment Management] staff for an action plan to enhance our asset manager risk management oversight program," Ms. White said in her speech. "Among the initiatives under near-term consideration are expanded stress testing, more-robust data reporting, and increased oversight of the largest asset management firms. To be an effective 21st-century regulator, the SEC is using 21st- century tools to address the range of 21st-century risks.”