SEC Chair White Talks About Future Rulemaking at Investor Advisory Committee Meeting (with Lofchie Comment)

Chair White delivered opening remarks at the meeting of the SEC Investor Advisory Committee (the "Committee"). She updated the status of current rulemakings and described what lies ahead.

Briefly, Chair White highlighted the new rulemakings crafted since February, including the adoption of Regulation A+ (for offerings of small companies) as well as proposed amendments to Exchange Act Rule 15b9-1 (which require broker-dealers that trade on more than one exchange to become members of FINRA, subject to very limited exceptions).

Moving forward, Chair White stated, she expects the SEC to prioritize activity in the market structure and asset management spaces, as well as in the agency's disclosure effectiveness initiative. She also mentioned that she expects the Committee will discuss advancing rulemakings to (i) impose a uniform fiduciary duty on broker-dealers and investment advisers under Dodd-Frank Section 913 and (ii) require a program of third-party examinations of investment advisers to increase exam coverage.

Additionally, Chair White stated, the SEC will advance the remaining Title VII (derivatives) and executive compensation rulemakings under Dodd-Frank. She also mentioned that the adoption of final crowdfunding rules is a current priority.

Lofchie Comment: The Chair's remarks suggest that Dodd-Frank Section 913 requires a uniform fiduciary rule to be imposed on broker-dealers and investment advisers. Section 9.13 only assumes that the concept of a uniform rule should be studied; it does not mandate the adoption of such a rule. Good arguments can be made against the idea of a uniform standard; i.e., that it will be impossible for small clients to obtain any advice from a broker because their asset sizes do not offer enough reason for the broker to take on the fiduciary liability and the role of investment advisor. One could argue that the purpose of the rule might be to prevent brokers from providing their retail clients with any investment advice (which might or might not be a positive outcome).

See: Chair White's Opening Remarks. Related news: SEC Proposes Amendments to Require Off-Exchange Broker-Dealers to Become Members of National Securities Association (Fed. Reg.) (with Lofchie Comment) (April 2, 2015); SEC Adopts Regulation A+ (with Delta Strategy Group Summary) (March 25, 2015).

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