Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

In keynote remarks given at the PLI Investment Management Institute last week, SEC Commissioner Elisse B. Walter reiterated her support for the “need to protect retail investors seeking investment advice by harmonizing the regulation of investment advisers and broker-dealers” and increased attention to the exam process.  In this context, Commissioner Walter discussed two recent SEC studies mandated by the Dodd-Frank Act. 

The first study considered issues surrounding the proposed uniform fiduciary standard.  The study recommended that the SEC “establish a uniform fiduciary standard of conduct for investment advisers and broker-dealers when providing personalized investment advice about securities to retail investors.”  This is a train that has left the station: anything but a uniform standard seems pretty unlikely going forward.  However, as Commissioner Walter correctly points out, how the abstract standard is interpreted in the guidance and rulemaking will be a necessary but quite difficult endeavor.

The second study dealt with options available for enhancing examinations and enforcement resources for investment advisers.  There is little disagreement, at least at the SEC, about the need for an increased frequency of exams.  There is no expectation that Congress will pay for that.  Although the study suggested that exams could be funded by user fees, Commissioner Walter favors the use of a self-regulatory organization, subject to SEC oversight, to conduct the exams.