Brokers Selling IRAs Face Tougher Rules In Obama-Backed Plan

‘Attractive Targets’

“This is the single most important financial decision many people will ever make, and it’s a point when investors become attractive targets for sometimes predatory practices,” said Barbara Roper, director of investor protection for the Consumer Federation of America. “So covering rollovers was a must for us.”

Sweeping criticism from brokerage firms and lawmakers including Democratic stalwarts such as Barney Frank led the Labor Department to scrap an earlier draft of the rule in 2011. Leading House Democrats say the agency’s new effort is better.

“I applaud the DOL for today proposing to close the loopholes and gaps in our current regulatory structure, and for addressing concerns I and many of my colleagues had with the prior proposal’s impact on low-income and minority retirees,” said Representative Maxine Waters, a California Democrat.

The brokerage industry would prefer that the SEC devise the fiduciary rules, fearing that the Labor Department’s version would make it impossible to charge commissions.

SEC Chair Mary Jo White said last month that she favors imposing a fiduciary standard on all types of retail-investment transactions. The SEC is far behind the Labor Department’s progress, however, and White warned the effort would be complex.