“It is a sad day in America when the agency that exists to protect investors decides instead to protect industry profits above investors’ best interests,” said Dennis Kelleher, president and CEO of Better Markets, at the press conference.
The PIABA and CFA noted these key deficiencies in Reg BI:
- The standard will not actually require brokers to act in their customers’ best interest;
- The standard will not prevent brokers from placing their own interests ahead of customers’ interests. Brokers will continue to be permitted to have conflicts that threaten their ability to act in a customer’s best interests.
- The standard will apply on a transaction-by-transaction basis regardless of the nature of the relationship between the broker and customer. Brokers will not be required to monitor customer accounts to ensure investments remain on track, something that most investors reasonably expect their brokers to be doing.
- In a weakening of investment advisor fiduciary standards, advisors will be able to satisfy the standard through disclosure alone, allowing them to place their interests ahead of their clients’ interests.
- The disclosures will be confusing and will not help investors make informed decisions.
Roper said, “Congress gave the SEC all the authority it needs to adopt a strong, pro-investor standard for brokers and advisors, and [Clayton] made a deliberate choice not to use that authority.” She added that Clayton refused to acknowledge his broad authority or the need for greater investor protections during meetings with the consumer advocate.
CFA is creating a campaign and tools to help investors continue to protect themselves, Roper said.