On the heels of the financial crisis and last week's passage of the Dodd-Frank Act of 2010, a new era of regulation is now upon us and Washington regulator's are moving at a brisk pace to vet and implement new rules that will provide greater protections for investors by increasing transparency and accountability by market participants. What is most notable about this new era is the opportunity for the public to provide input that could shape new regulations. Here is a run down of some key issues currently being considered in Washington:
- SEC Study of Broker-Dealers and Investment Advisers. The SEC must study and report back to Congress by January 2011 on regulatory standards of care for brokers and advisers. The results of the study are expected to form the basis for future rulemaking by the SEC to implement a consistent fiduciary standard for brokers and advisers. The SEC has initiated a 30-day public comment period, which will likely end on August 30, 2010.
- Open Comments on SEC Initiatives under Dodd-Frank Bill. The SEC also has invited public comment on a host of other initiatives that it must undertake pursuant to the Dodd-Frank bill. Of most interest to our readers may be the SEC's review of investment adviser exams (which the SEC must study and report on by January 2011), and pre-dispute arbitration (which the SEC now has the authority to limit). There currently is no deadline for comments, but the public should note that deadlines will be imposed once the SEC announces a formal request for comments or engages in rulemaking for any particular issue.
- SEC "12b-1" Proposal. The SEC has put forth a proposal that would eliminate traditional 12b-1 fees and break them down into "ongoing sales charges" and "marketing and service fees" that will be subject to caps and new disclosure requirements. Comments on the proposal are due November 5, 2010.
- DOL 408(b)(2) Interim Final Rule. DOL issued its final rules under ERISA Section 408(b)(2) requiring service providers to provide specific service and compensation disclosures to plans. The new rules will go into effect July 16, 2011. In the meantime, DOL has invited public comment on the new rules, specifically on the feasibility and cost effectiveness of requiring plan service providers to furnish plan fiduciaries a summary disclosure statement. Comments are due August 30, 2010.
- SEC Target Date Fund Proposal. The SEC issued a proposal in June that would establish new dislcosure and advertising requirements for target date funds. Comments are due August 23, 2010.
These initiatives and comment periods only mark the beginning of the new wave of regulation expected from Washington in the next couple of years. We urge our readers to stay informed on regulatory reform, provide input to regulators, and encourage your business partners and clients to do the same.
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