Securities and Exchange Commission Archives - RetireAware Blog : RetireAware Blog

Allen Steinberg

19.07.2019 02.55 GMT+0000

The SEC’s new Regulation BI relies heavily on increased disclosure of conflicts of interest to protect investors. However, there is research indicating that, where an economic conflict exists increased disclosure makes things worse--not better. This research is worth considering as we assess the implications of these new rules.

Understanding the Impact of Disclosure

Research indicates that disclosing conflicts of interest may not have the desired effects.

Broker Conflicts Disclosures

SEC rules to protect investors from brokers (with conflicting economic incentives) relies heavily on disclosure of these conflicts. However, some academic research raises questions about the impact of increasing disclosure where parties’ interest may conflict. Significantly, conflicted advisors may provide more biased advice (to offset the impact of the disclosure) and customers may not adequately assess or consider the nature of the conflict.

Allen Steinberg

25.06.2019 05.38 GMT+0000

SEC Finalizes New Standards for Broker Dealers

The SEC has adopted new rules for broker-dealers that expand disclosure requirements and require broker-dealer to act in the “best interest” of customers.

Broker Conflicts Disclosures

The SEC has finalized rules governing the behavior of broker-dealers. Under this rule broker dealers need to (i) provide investors with additional disclosure regarding fees, services and conflicts of interest and (ii) use care and diligence to develop a reasonable belief that a recommendation is in the “best interest” of the customer and not place the interest of the broker dealer “ahead of” the interest of the customer.

Allen Steinberg

12.12.2018 06.53 GMT+0000

In the absence of new regulatory support, employers need to use their power in the market to protect participants from conflicted service models.

The (Financial) Empires Strike Back

Initiatives to provide participants with protection from conflicted service models frequently meet with resistance from…the financial industry. What can employers do?

financial industry Regulations

Government initiatives aimed at protecting retirement plan participants from conflicted advice are often resisted -- and occasionally derailed -- by the financial services industry. Employers must understand that regulatory agencies are constrained and, rather than wait for regulatory protections employers must understand that they are in the best position to protect participants.

Allen Steinberg

27.11.2018 04.33 GMT+0000

A complaint filed by the SEC illustrates how brokers can create -- and capitalize on -- employee confusion about their employer-sponsored retirement plan.

Caveat Emptor. Really.

Want To Buy A Bridge? Retirement Plan Providers Profit from Participant Confusion.

Plan Provider Complaint Plan Provider Confusing Plan Provider Deceptive

A complaint brought last year by the Securities and Exchange Commission alleges that four brokers targeted federal employees in the federal employees’ defined contribution plan and misled participants about the brokers’ relationship with the federal employees’ plan. Although the conduct described in this case is particularly egregious, this case has lessons for all plan sponsors and fiduciaries.

Allen Steinberg

11.09.2018 12.42 GMT+0000

Recordkeepers who also sell financial products and services are subject to regulation by the SEC. Recent events indicate that the SEC may fill the void left by DOL inactivity on replacement of the defunct fiduciary rule.

From DOL to SEC and Beyond

Will the SEC Play a Larger Role in Retirement Plan Governance?

DOL fiduciary SEC

Events of recent months indicate that a regulatory shift may be occurring. The Department of Labor has gone silent on the conflicts of interest in the financial industry that affect retirement plans, while the Securities and Exchange Commission seems to have taken up the responsibility for addressing these issues.

Allen Steinberg

31.05.2018 01.21 GMT+0000

There is significant evidence that consumers are placing their trust - and their money - with financial professionals who have financial incentives that conflict with consumers’ best interests. It does not appear that the current debates over professionals’ standards of conduct will make real progress in addressing this issue.

Dancing on the Head of a Pin

Regulators and courts may focus on the different rules for “investment advisers” and “brokers.” But, in the real world, this distinction confuses investors and undermines consumer protections.

Broker fiduciary Investment Adviser

There are key legal differences between investment advisers and brokers. However, consumers do not understand the implications of these differences. Consumers’ confusion is exacerbated by industry advertising, with references to “financial advisers,” “wealth managers” and “financial consultants” further blurring the difference between investment advisers and brokers.

Allen Steinberg

27.04.2018 03.36 GMT+0000

The SEC’s proposed new rules require broker-dealers’ obligations to act in customers’ “best interests.” The SEC proposal, in some ways, fills some of the gaps created by the recent court decision to invalidate DOL regulations expanding the definition of ERISA “fiduciary.”

The SEC Enters the Fiduciary Fray

The SEC has now weighed into this fiduciary fray, proposing new rules governing the behavior of broker-dealers.

Broker Conflicts Disclosures

The SEC has proposed new rules governing the behavior of broker-dealers. Under this proposal a broker- dealer “shall act in the best interest of the retail customer . . . . without placing the financial or other interest of the [broker-dealer] ahead of the retail customer.” The primary requirements of “best interest” are that broker-dealers disclose fee structures and not place their financial interests ahead of customers’ interests.