Appeals decision opens door for SEC best interest standard

Author: John Crabb | Published: 21 Mar 2018

The United States Court of Appeals for the Fifth Circuit decision last week to vacate the Department of Labor’s (DoL) fiduciary standard rule will give the Security and Exchange Commission (SEC) unfettered freedom to craft its own version of the rule that applies to the entire broker-dealer industry.

Presiding judges on the court ruled by a two-to-one majority to cast aside the rule, based largely on arguments put forward by the US Chamber of Commerce and the Securities Industries and Financial Markets Association (Sifma).

The fiduciary standards rule loosely demands that retirement advisors act in the best interests of their clients and put their interests above their own.

SEC chairman Jay Clayton this week confirmed that the commission continues to be in the process of drafting its own version of the rule, but suggested at Sifma’s C&L Annual Seminar that the court decision would have little effect on how it looks....