SEC Committee to Host Investment Advice Discussion

The Securities and Exchange Commission’s Investor Advisory Committee will host a public hearing on September 19 to discuss the current state of investment advice provided by financial professionals, the regulator announced Thursday.

The committee, which advises the SEC on how to help protect investors, will hold a public discussion giving a history of and update on investment advice and trends in securities litigation, starting at 10 a.m. EDT at the regulator’s headquarters in Washington, D.C. and available to watch via the SEC’s website.

The investment advice panel is being held in part to discuss the “uncertainty and confusion” stemming from two federal district court judges staying the Department of Labor’s Retirement Security Rule, which sought to revise the definition of fiduciary advice for retirement-related investments.

“In light of those court decisions and the varying definitions of fiduciary under SEC rules, ERISA and state law, this panel will discuss the differences, similarities and nuances of financial professionals’ obligations to their clients and how this may impact investors,” the advisory wrote in its description of the session, which will be titled, “Investment Advice: A History and Update on Who is Required to Serve in Your Best Interest.”

Those opposed to the DOL’s proposal, including plaintiffs in the lawsuits filed in two Texas district courts, have argued that the SEC’s Best Interest regulations, along with state rules regulating the sale of insurance products, already protect investors from getting bad or conflicted advice. Those opponents also allege that the DOL overstepped its jurisdiction with its fiduciary rule amendments.

The DOL has yet to respond to the stays in court, though the docket for American Council of Life Insurers v. Department of Labor shows an order for it to file by September 27.

The first SEC advisory session will include Jason Berkowitz, chief legal and regulatory affairs officer for the Insured Retirement Institute, which has opposed the DOL’s amended rule. It will also include Erin Koeppel, managing director of government relations and public policy counsel at the CFP Board, which has been in favor of the DOL’s rule.

The second session will focus on trends in securities litigation, including the regulatory framework that protects investors’ ability to submit shareholder proposals and to bring Section 11 claims—which seek to hold investment advisories liable for damages caused by untrue statements.

The Investor Advisory Committee was established by the Dodd-Frank Act and is authorized by Congress to submit findings and recommendations to the commission.

The agenda for the discussions is at this link.