The Securities and Exchange Commission plans to “move forward”next year with a uniform fiduciary standard rule for advisers andbrokers when providing personalized investment advice as well as“continue to assess” ways to better harmonize advisor and BD ruleswhen they are providing similar services, according to the agency'sjust-released 2012 Financial Report.

The agency will forge ahead with a fiduciary rule in 2013 evenwith a new chairman at the helm, SEC Commissioner Elisse Walter, who will fill in for Mary Schapiro until apermanent chairman is named. While Walter, a Democrat, has sidedwith current SEC Chairwoman Schapiro as well as the otherDemocratic commissioner, Luis Aguilar, in “vigorously” advocating“that all investors should receive equal protection under the lawfrom a uniform fiduciary standard,” she likely wouldn't go alongwith putting brokers under the Investment Adviser Act fiduciarystandard. However, Walter has been a strong proponent ofharmonizing adviser and BD rules.

Schapiro told AdvisorOne in late September that the agency was indeed moving forward with arule proposal internally, and that she was “ready to go” onreleasing a request for information to allow the public to helpinform a “more detailed” cost-benefit analysis on the agency'sfiduciary rule. She said at the time that “it would be nice to getthis final request for information,” however, such a commentrequest has yet to be issued by the agency.

David Tittsworth, executive director of the Investment AdviserAssociation in Washington, says the question now is whethersoon-to-be Chairman Walter “has two other votes to support therequest for public comment, ” as the two Repulican CommissionersTroy Paredes and Daniel Gallagher “ have expressed reservationsabout a fiduciary rulemaking in the absence of appropriatecost-benefit information and analysis.” Thus, Tittsworth says,“Chairman Walter would have to address their cost-benefit concernsin order to move forward with a request for comments and,ultimately, a rulemaking on fiduciary standards.”

Barbara Roper, director of investor protection for the ConsumerFederation of America, agrees, noting that while it's “encouraging”that further efforts on a fiduciary rule are on theagency's agenda, “unless the Republican [commissioners] areprepared to drop their opposition,” to a fiduciary rule “it's goingto take a third Democratic vote to finalize a rule.”

Indeed, there was disagreement among the SEC Commissionersthis year on “which questions to even ask in a preliminarycost-analysis review to submit for public comment prior to agreeingon an actual proposal,” adds Duane Thompson, senior policy analystat fi360. “Complicating things even more is the likelihood of a 2-2deadlock on many issues before the Commission, including thefiduciary study, at least until a nomination is submitted by theObama Administration to fill the open Commission slot” afterSchapiro resigns.

The same question exists with respect to other “harmonization”issues, Tittsworth adds. Section 913 of Dodd-Frank “authorized theSEC to conduct rulemakings on various aspects of disclosure as wellas 'rules prohibiting or restricting certain sales practices,conflicts of interest, and compensation schemes for brokers,dealers, and investment advisers that the Commission deems contraryto the public interest and the protection of investors.'”

The report's “Looking Forward” section also states that theSEC's Division of Investment Management will hire additionalexaminers next year to oversee funds and advisers, if the money isavailable. These examiners, the report states, “would increaseinvestor protection by supplementing and coordinating with otherexamination efforts. They would also bring skills and specializedexperience to examinations of funds and investment advisers.” Inaddition, the examiners' specialized skills are “expected todirectly inform and support and improve policies and rulemakingsthat address industry practices observed during exams.”

The exam function, the division says, “will be part of a largerOffice of Risk and Examination Group, which will also conductrigorous quantitative and qualitative financial analysis of theinvestment management industry to assist the Commission and theDivision in carrying out their missions.”

Along with other Dodd-Frank and Jumpstart Our Business Startups(JOBS) Act rulemakings, the report also states the agency willfinalize rules that disqualify securities offerings involvingcertain “felons and other 'bad actors'” from relying on the safeharbor from Securities Act registration provided by Rule 506 ofRegulation D.

The SEC says that it will engage in rulemaking to implement theJOBS Act's provisions, including modifying the prohibition againstgeneral solicitation and general advertising in Rule 506 ofRegulation D and Rule 144A under the Securities Act, andimplementing exemptions under the Securities Act for “crowdfunding” offerings and unregistered public offerings ofup to $50 million.

This article was originally posted at AdvisorOne.com, a sister site of CreditUnion Times.