Securities Cop, Democrats Slam Dodd-Frank Alternative
House Democrats and Massachusetts’ Secretary of the Commonwealth William Galvin says a Dodd-Frank overhaul proposal currently under review in Congress will hurt investors and “promote conflicts of interest,” according to ThinkAdvisor.
Massachusetts’ top securities watchdog has written a letter to the House Financial Services Committee chairman Jeb Hensarling, R-Texas, criticizing his Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE) Act, according to the publication. Galvin says the act, designed to replace Dodd-Frank and approved by the committee in September, will curb the SEC’s and states’ enforcement capacity, expose retail investors to added risk, reduce disclosure requirements and allow for more conflicts of interest, ThinkAdvisor writes.
Galvin’s letter takes aim at “language that would revoke the U.S. Department of Labor’s Fiduciary Rule,” which requires retirement brokers to put clients’ interests first but has been delayed at least until June. Galvin argues that the rule should be “maintained and conscientiously administered,” according to the publication. The SEC has yet to come out with a fiduciary rule, although its acting chairman has said the commission should lead the effort on a fiduciary rule that would apply to all retail investors.
But while Hensarling called the act a "better way" to regulate Wall Street when he reintroduced the bill Wednesday, Rep. Stephen Lynch, D-Mass. said the bill was "paving the way" for the next recession, ThinkAdvisor reports. “It essentially repeals Wall Street reform,” he said.
During debate on the bill, scheduled for only one day, Democrats continually asked Hensarling to provide them with more hearings to discuss the bill to replace Dodd-Frank, noting that Dodd-Frank required 41 hearings, ThinkAdvisor reports.
Meanwhile, a lobbying group in favor of the rule is urging members of Congress to oppose spending riders that could halt or kill it, InvestmentNews writes. The Financial Planning Coalition, which includes the Certified Financial Planner Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors, wrote that lawmakers should “strongly oppose any rider that will delay or prevent implementation,” the publication writes.
From the opposite camp, Paul Schott Stevens, president and CEO of the Investment Company Institute, is urging the Labor Department to put politics aside and kill the Obama-era rule. The DOL ignores findings from ICI and others that purportedly prove the rule would harm savers in individual retirement accounts, he writes in a letter to the Wall Street Journal. While the rule is pending, “hundreds of thousands of small account holders” are losing access to financial advice, he writes.
Separately, the full Senate voted 61-39 Wednesday to advance Alexander Acosta's nomination for Labor secretary.