In comments on the Massachusetts Securities Division (the "Division") proposed regulation to create fiduciary standards (the "Proposal") for broker-dealers, SIFMA stated that the Division instead should allow the SEC's Regulation Best Interest to be fully implemented before considering a state-specific rule.
According to the Division, the proposed regulation mandates that investment advice be given only under a fiduciary standard. The Division explained that the SEC's final Regulation Best Interest rule does not establish a "strong and uniform" fiduciary standard but rather sets ambiguous requirements. The Division stated that while relationship and conflict disclosures are important for investors, they do not replace a clearly defined standard of conduct.
SIFMA responded that the state Proposal limits consumer access and imposes fiduciary requirements that will "constrict" the brokerage model. SIFMA stated that consumers likely will see adverse effects, including (i) limitations on the programs available to them, (ii) increases and changes to pricing of these programs and (iii) limitations on the investment products available. SIFMA warned that if the Proposal is enacted, consumers will lose contact with investment professionals, and firms may rely increasingly on call centers with reduced professional interaction.
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