Two crucial rulemakings that would provide investors with significant protection may be stopped in their tracks. To prevent this from happening, a group of industry and consumer protection organizations are urging the House Financial Services Committee to reject the Retail Investor Protection Act (H.R. 2374), which is under consideration today by the Committee.
“Despite its name, H.R. 2374 is not an investor protection bill,” stated the groups in a letter
. “To the contrary, it would leave American investors with significantly less protection.”
The organizations signing the letter – AARP, Certified Financial Planner Board of Standards, Consumer Federation of America, Financial Planning Association, Investment Adviser Association, National Association of Personal Financial Advisors and the North American Security Administrators Association
– cited two specific negative outcomes should the legislation, as written, become law.
First, the bill “imposes unnecessary and onerous rulemaking requirements that the Securities and Exchange Commission (SEC) must meet before it can adopt a fiduciary rule.” While rules the SEC adopts should undergo economic analysis before adoption, the legislation sponsored by Rep. Ann Wagner (R-MO), requires a burdensome cost-benefit analysis that “would delay (or even prevent) the rulemaking and increase the likelihood of it being struck down by the courts upon legal challenge.”
The second concern is that the legislation links the two rulemakings and would prevent the Department of Labor (DOL) from moving forward with its rulemaking on the definition of fiduciary under ERISA, a statute that plays an important role in protecting Americans’ retirement accounts. In short, the legislation prevents the DOL from moving forward with its rulemaking until two months after the SEC issues a final rule related to broker-dealer conduct standards.
“This not only unnecessarily slows DOL’s rulemaking, but it potentially halts DOL’s rulemaking altogether if the SEC does not act on a fiduciary rule,” noted the group in its letter, urging the Committee to let the DOL move forward with its own rulemaking as it is the expert agency.
In urging Committee Chairman Jeb Hensarling (R-TX) and Ranking Member Maxine Waters (D-CA) to oppose the bill, the groups noted that this measure would hurt investors, which is the opposite of its intended purpose.
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