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Regulation Doesn't Trump Fiduciary Standard, Reg BI Author Insists

July 12, 2019

One of the authors of the SEC’s overhaul of its investment advisor and broker conduct regulation says that broker requirements in the package aren’t more stringent than the requirements put on investment advisors, according to news reports.

"It is not true to say that the broker-dealer standard is higher than the fiduciary standard,” Dalia Blass, director of the SEC Division of Investment Management, said at a Sifma seminar in Washington this week, according to InvestmentNews.

One SEC commissioner, Hester Peirce, and others have suggested Regulation Best Interest, as the package is known, is a tougher regulation than the fiduciary duty since it forces brokers to mitigate conflicts of interest, the publication writes. But Blass said at the Sifma conference that investment advisors must still eliminate or mitigate conflicts in how the advisor standard in the rule package is interpreted, according to InvestmentNews.

"To say that mitigation is not there in the advisory world is not correct and to say one standard is higher than the other is also not correct," Blass said, according to the publication.

(Getty)

Later the same day, meanwhile, Peirce took a “more nuanced” stance on the issue, saying that both Reg BI and the fiduciary standard are strong, InvestmentNews writes.

Reg BI applies to recommendations and is more prescriptive, while the fiduciary duty applies to a relationship and is thus ongoing, she said, according to the publication.

“It depends on which perspective you're taking," she tells InvestmentNews.

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