Treasury Proposes Legislation Expanding SEC Authority

The Treasury Department has proposed legislation that would expand the SEC’s authority to impose a fiduciary standard on brokers, expand disclosures to investors about their relationship with their investment professionals, regulate compensation practices for financial intermediaries, and require a point-of-sale disclosure for mutual funds. With respect to the fiduciary standard, the proposed legislation would allow the SEC to promulgate rules that provide that the standard of conduct for all brokers, dealers and investment advisers “shall be to act solely in the interest of the customer or client without regard to the financial or other interest of the broker, dealer, or investment adviser providing the advice.” The proposed legislation also allows the SEC to limit pre-dispute arbitration and enhances whistleblower protection.

OUR TAKE: Little of the substance of the proposed legislation is surprising. What is noteworthy is the Obama Administration broadening the SEC mandate rather than directly regulating through specific legislative mandate.


http://www.treas.gov/press/releases/docs/tg205071009.pdf