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State Securities Regulators Want Tougher SEC Standard for Brokers

November 20, 2018

The North American Securities Administrators Association wants the SEC’s proposed Regulation Best Interest to include a higher standard for brokers, according to news reports.

“I think there is a benefit to having a national fiduciary standard and working with the SEC to get that, but states still have the responsibility to protect investors,” Vermont financial regulation Commissioner Michael Pieciak, who became NASAA president in September, tells FA magazine.

Pieciak also tells the publication he’s had several productive meetings with SEC Chairman Jay Clayton and expects to deliver NASAA’s next comment letter to the commission — its third — shortly.

In addition, Pieciak tells FA magazine that while NASAA isn’t pursuing a model fiduciary regulation, he “wouldn’t rule that out” if the SEC’s package of rules is viewed by state regulators and legislators as not imposing the fiduciary standard on broker-dealers.

Nevada, meanwhile, has a fiduciary rule on the books, and the New Jersey Bureau of Securities was expected to start seeking comments on a state fiduciary rule last month.

Pieciak tells FA magazine that “uniformity and preservation of state authority” are NASAA members’ top concerns.

Currently, the SEC’s proposed rules only require brokers to mitigate conflicts of interest, but not to abide by the fiduciary standard as was required by the Department of Labor’s fiduciary rule.

The Obama-era rule from the DOL, which purported to require only retirement account advisors to put clients’ interests first, went only into partial effect last year and was finally vacated in March following a directive from the administration of President Donald Trump to review the rule’s effects.


Critics of the SEC’s proposed rule, meanwhile, say the commission has to spell out that its best interest standard is the same as the fiduciary standard, as reported.

Pieciak also tells FA magazine that another concern the NASAA has is with the level of disclosure, following reports of investor confusion on its proposal.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.