While President Obama grabbed the headlines on the financial regulatory reform front with his address to Wall Street on Monday, legislators and regulators throughout Washington have been hard at work seeking to effect regulatory changes.
The House Financial Services Committee announced its tentative hearing schedule for the next month and its plans to begin marking up financial reform legislation in October. Missing from the hearing schedule is the issue of investor protection, and specifically proposals to extend the fiduciary standard to all advice givers and "harmonize" broker-dealer and investment adviser regulation. However, consideration of the Consumer Financial Protection Agency signals Congress' continued eagerness to address key consumer and investor protection issues as a part of financial regulatory reform efforts.
Meanwhile, as questions continue to arise regarding the SEC's resources and capability to carry out its mission, especially in light of new reported failures by the SEC in the Madoff scandal, Senator Charles Schumer of the Senate Banking Committee announced he will propose legislation to allow the SEC to keep all fees and fines collected by the agency; a proposal that quickly drew criticism.
Eager to restore accountability and public confidence (not to mention make the case to Congress for the agency's necessity), the SEC made several key announcements this week. Of most interest on the fiduciary front is the announcement that the new Investor Advisory Committee has formed three sub-committees, one of which will consider the fiduciary duty owed to investors by those who provide investment advice. In addition the Commission announced the creation of a new website with information about the Committee and that the Committee will next meet on October 5.
The SEC also announced this week the formation of the new Division of Risk, Strategy, and Financial Innovation - a move that will help the agency more readily respond to risk in the market and new financial products and services - and its intention to explore global financial regulatory requirements with UK regulators.
And on the 401(k) front, Phyllis Borzi, the Assistant Secretary of the Employee Benefits Security Administration, announced at the ASPPA conference this week that the Department of Labor is pulling investment advice regulations that were issued under 408(g) of ERISA earlier this year. The Department of Labor is expected to propose new regulations, but no timeline for a proposal has been announced.
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