Wall Street Broker-Conflict Rules Poised for Overhaul by SEC

(Bloomberg) -- The U.S. Securities and Exchange Commission plans to hold a June 5 meeting to vote on the most sweeping overhaul of broker rules in years, setting new standards for Wall Street on what the regulator considers inappropriate conflicts of interest.

Key Details

• At the meeting, SEC commissioners will decide whether to “establish a standard of conduct for broker-dealers” when they advise retail customers on “any securities transaction or investment strategy involving securities,” according to a notice posted Thursday on the agency’s website.
• SEC commissioners will also vote on new rules that would require registered investment advisers and brokers to provide a “brief relationship summary to retail investors.”
• The SEC first proposed its rule, known as regulation best interest, in April 2018. It would have required brokers to disclose to clients all pertinent information about potential conflicts, while compelling firms to have a “reasonable basis” for concluding that investments were in the best interest of their customers.
• The SEC’s proposal has been controversial, with investor advocates arguing that it isn’t as tough as imposing a so-called fiduciary duty on brokers. Being a fiduciary requires that finance professionals put their customers’ interests ahead of their own.
• Then-President Barack Obama’s Labor Department passed rules in 2016 imposing a fiduciary obligation on brokers, but those regulations were struck down by a federal appeals court.

Read More

• Trump’s SEC Proposes Obama-Era Broker Conflict Rules Rewrite

To contact the reporter on this story: Jesse Westbrook in Washington at jwestbrook1@bloomberg.net

To contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory Mott, Jesse Hamilton

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