A New York state legislator who had previously introduced a bill to impose a state fiduciary duty on financial professionals is drafting a new version of the measure he claims will be stronger than the SEC’s recently-approved package of broker and investment advisor standards, according to news reports.
Last year, Assemblyman Jeffrey Dinowitz, D-Bronx, introduced a bill requiring advisors to disclose whether they were fiduciaries, but the legislation died in a secondary committee, InvestmentNews wrote at the time.
Dinowitz then reintroduced the measure this January, with language identical to the one from 2018, an aide told the publication. In March, Dinowitz’s legislative director said that the assemblyman was “cautiously optimistic” about the SEC’s Regulation Best Interest and wasn’t in a rush to push through his state-level initiative.
The bill also died as the legislative session came to an end in June, according to the publication. That was the same month the SEC approved Reg BI, as it’s come to be known.
And apparently Dinowitz, who’s chairman of the New York Assembly's Judiciary Committee, isn’t satisfied with the SEC’s package. He’s now working on another bill that would hold financial advisors in New York to the fiduciary standard, and hopes to introduce it when the next legislative session starts in January, InvestmentNews writes.
“This would be a stronger bill because advisers are not required to act in a consumer's best interest," Dinowitz said, according to the publication. "New York — of all places, given our role in the financial industry — we need to do everything possible to ensure consumers are protected from unscrupulous advisers."
According to Dinowitz, changes to the SEC’s proposal didn’t go “far enough to protect consumers," and he’s looking to other states’ fiduciary rule initiatives to craft his legislation, InvestmentNews writes. Nevada, New Jersey and Connecticut have been working on their own versions of state-level fiduciary rules, and Massachusetts Secretary of the Commonwealth William Galvin put out a proposal for such a rule last month, also arguing that the SEC’s regulation didn’t go far enough to protect the state’s citizens.
But other states may in turn follow New York’s, whose Department of Financial Services imposed the fiduciary standard on insurance and annuity sales, Bruce Ashton, a partner at Drinker Biddle & Reath, tells InvestmentNews.