The fiduciary rule, a last-gasp Obama administration effort to protect investors and/or enrich trial lawyers, and also—according to one local unemployed man—the worst act of the U.S. government since it denied citizenship to all black people, is on its last legs. Never put into effect, it now lingers in legal limbo as President Trump’s deregulatory militia argues over who gets to put it up against the wall and shoot it.
It all looks a little unseemly, this rush to allow financial advisers to screw their customers in exchange for the highest kickback, even if Gary Cohn says that’s the American Way. Something has to be put in its place, something that won’t actually protect any investor from anything, but that can be given a feel-good name and pointed at when the Elizabeth Warrens of the world annoyingly go on calling the Trump administration one of, for and by Wall Street. Acting SEC Chairman Michael Piwowar, as ardent an opponent of the dying fiduciary rule as anyone, has an idea.
“We at the SEC need to take the opportunity now to fill that space,” Mr. Piwowar, a Republican, said at a conference sponsored by the Mutual Fund Directors Forum….
The SEC could write the rule in such a way that it raises the standard for brokers advising retail investors, but makes it easier to maintain business practices—such as sales commissions and other incentives—that can skew the advice that a broker provides to a client.
The SEC’s version also could rein in the threat of class-action lawsuits against brokers. The Labor Department’s rule gave IRA account holders a new right to sue financial advisers who don’t adhere to the best-interest standard.