Securities and Exchange Commission Chair Jay Clayton announced Thursday the SEC is opening a new round of public comment on the standard of care applicable to registered investment advisors, broker-dealers robo-advisors and other fintech operators when they provide advice to retail investors.

The last round happened in 2013.

Clayton said the move comes in the wake of Department of Labor Secretary Alexander Acosta’s urging for DOL and the SEC to analyze the issues jointly.

Chairman Clayton noted DOL’s rule may have significant effects on the SEC core missions of protecting investors, facilitating fair and orderly markets, and facilitating capital formation.

“I believe clarity and consistency -- and, in areas overseen by more than one regulatory body, coordination -- are key elements of effective oversight and regulation.  We should have these elements in mind as we strive to best serve the interests of our nation's retail investors in this important area,” the SEC Chairman said.

Clayton called RIA and B-D standard of care significant for the goals of retail investors to save for retirement, college and to buy homes.

He added the collection and analysis of public comment will be used to help drive SEC decision making in this space.

“I believe an updated assessment of the current regulatory framework, the current state of the market for retail investment advice, and market trends is important to the Commission's ability to evaluate the range of potential regulatory actions,” Chairman Clayton said.

Speaking to the fiduciary rule specifically, Clayton said he wants to hear if the SEC should consider the best-interest standard for retirement plan advisors in any potential actions relating to the standards of conduct for retail investment advice.

As the rule is making fee-based services more commonplace, Clayton said he is seeking to find out if the trend has impacted the availability, quality, or cost of investment advice, investment products and services, for retail investors.  

He added he also wants to discover if the trend raises new investor risks.

One area likely to receive significantly more comment than in the 2013 go-round is the universe of robo-advisors and other fintech.

“How should these market developments and advances in technology affect the Commission's consideration of potential future actions? What steps should the Commission take, if any?” Clayton said he wants to hear.

Among the other issues the SEC Chairman said he is seeking input on this time are:

• Has the public confusion over the different standard of care owed by advisors and broker dealers gotten better or worse since the 2013 comment period? If there still is confusion is it harming retail investors?

• Are there steps the Commission should take to address conflicts of interest and would the steps lead to, would broker-dealers or investment advisers be withdrawing from or limiting offerings or services in certain markets or products?

To send comments to the SEC on these issues, use the following webform: https://www.sec.gov/cgi-bin/ruling-comments.

Or email:
[email protected] with IA-BD-Conduct-Standards in the subject line.