Rep. Maxine Waters’ amendment to block funding for the Securities and Exchange Commission’s Regulation Best Interest rule passed the House of Representatives as part of a larger funding bill.
The amendment, passed the House in a 227-200 vote, moving onto the Republican-controlled Senate, where its fate is uncertain. The amendment targets the SEC’s newly adopted Reg BI rule.
Reg BI, approved by the Commission in a 3-1 vote on June 5, would hold broker-dealers to a best-interest standard that Financial Services Committee Chairwoman Waters, D-Calif., has criticized as not strong enough.
If Senate approves the amendment as part of HR 3351, the Financial Services and General Government Appropriations Act, the SEC may have to move its June 30, 2020, rollout for Reg BI.
The Insured Retirement Institute said in a statement that it is disappointed by the results, saying in a statement that the rule “should move forward and be given time to work.”
Jamie Hopkins, director of retirement research at Carson Group took to twitter to offer Waters his support.
Hopkins elaborated on his reason for supporting Waters’ efforts to halt Reg BI.
“Maxine Waters' amendment to block funding for Reg BI shows the split stances and feelings on the SECs new rule making, Hopkins said. “Consumer advocates have been vocal that the rule is not a win for individual investors.”
Hopkins added that the “watering down” of the standard and the blurring of language is cause for concern among fiduciary advocates. “The SEC was clear that the broker BI standard is not the same as a fiduciary standard, but the language required on the new CRS form makes it look pretty close,” he said.
The problem lies in advisors and broker-dealers both being told to use best interest language when describing their standard of conduct on Form CRS, Hopkins said. The only key difference between the two being that for fiduciaries, the standard applies when they act as an investment advisor and for broker-dealers it applies when they make recommendations.
Hopkins believes that the language can be misleading and doesn’t paint an accurate picture of what is potentially at stake for investors.
“Well, Hopkins said. “I am not sure that the broker language isn't actually more appealing to consumers. I personally like the term recommendation better than act.”
Despite his support for Waters’ amendment, Hopkins says he doesn’t see it passing the Senate.
“Similar bills were proposed during the DOL fiduciary rule making from republican lawmakers to defund the DOL in relation to the rule, so this tactic is nothing new, and honestly, is a rinse and repeat of a recent tactic," He said. "Previously, it didn't work and I wouldn't expect it to work with the current Senate setup and with President Trump in office.”
AdvisorNews Managing Editor Cassie Miller may be reached at [email protected] Cassie has an extensive background in magazine writing, editing and design. Follow her on Twitter @ANCassieM.