Rules In Focus Newsletter

Rules in Focus is FSR’s regulatory newsletter featuring the latest insights from the Fed, CFPB, SEC and other major regulators that oversee the financial services industry and the implementation of the Dodd Frank law.


Rules in Focus: FSR Urges Reforms to Enforcement Proceedings in the SEC’s Administrative Forum

December 10, 2015

FSR recently commented on the Securities and Exchange Commission’s (SEC) proposal to update the procedures used to litigate alleged violations of securities laws and regulations before the SEC’s Administrative Law Judges (ALJ). Given the SEC’s enhanced authority under the Dodd-Frank Act and the SEC’s increasing tendency to bring enforcement actions in administrative proceedings rather than in federal courts, FSR urged the SEC to take further steps to ensure that the SEC’s proceedings are fair for targets of SEC enforcement actions (respondents).


Rules in Focus: Congress Signals Bipartisan Support for Changes to DoL’s Retirement Advice Rule

November 20, 2015

As the Department of Labor (DoL) prepares to release the final rule on retirement advice in the first half of 2016, members of Congress on both sides of the aisle continue to urge the DoL to address unintended consequences of the proposed rule that would adversely impact low and moderate-income workers’ access to high-quality, affordable investment advice, and would hamper the ability of small businesses to provide retirement plans to their employees. Recently, Members of Congress sent two letters to Department of Labor Secretary Thomas E. Perez, asking that the DoL take specific steps to ensure that the rule avoids undue harm to retirement savers.

Rules in Focus: House Republicans Demand Changes to Proposed DoL Rule on Retirement Investment Advice

October 21, 2015

Last week, more than 100 House Republicans sent a letter to Secretary of Labor Thomas Perez opposing the Department of Labor’s (DoL) proposed regulation to expand the definition of “investment-advice fiduciary” under the Employee Retirement Security Income Act. The Republican lawmakers noted the proposed rule’s “mechanics and complexity” would “[restrict] access to affordable financial guidance and product choice” for Americans seeking a secure retirement. Noting their concerns are shared by Democrats, they urged Perez to “revise the rule to address these broad bipartisan concerns for American families seeking to save for retirement.”


Rules in Focus: FSR Again Urges DoL to Simplify its Proposed Rule on Offering Retirement Advice

September 30, 2015

On September 24, FSR submitted a follow-up letter again urging the Department of Labor (DoL) to adopt an alternative “prohibited transaction exemption” (PTE) as part of its pending rulemaking on defining investment advice fiduciary under the Employee Retirement Income Security Act (ERISA). FSR’s proposed “SIMPLE” PTE would incorporate practices to ensure that retirement investors receive advice that is in their best interest. It would also avoid many of burdens on consumers that the DoL’s proposed “Best-Interest Contract” PTE would impose.

Rules in Focus: Congressional Hearing Notes Dangers of Proposed DoL Fiduciary Rule for Retirement Savers

September 17, 2015

House members recently held a joint hearing to discuss the need for legislation to delay or stop proposed rules issued by the Department of Labor (DoL) that would revise the definition of investment-advice fiduciary and related exemptions.

If the rule is enacted, it is expected to restrict low and moderate-income American’s access to financial professionals. The joint hearing was conducted by two subcommittees of the House Financial Services Committee and considered H.R. 1090, “The Retail Investor Protection Act,” which was introduced by Representative Ann Wagner (R-MO).

Wagner’s bill would delay any final DoL rule until the Securities and Exchange Commission moves forward with a new regulation establishing a uniform standard of conduct for all broker-dealers and registered investment advisers providing personalized advice concerning securities to individual investors. Committee Chairman Jeb Hensarling (R-TX) indicated that the bill will likely be voted on and passed out of committee before the end of the month.


Rules in Focus: FinCEN Proposes Rules to Prevent Advisers from Being Used For Money Laundering, Terrorist Financing

September 2, 2015

The Financial Crimes Enforcement Network (FinCEN) recently issued proposed rules on anti-money laundering (AML) requirements for investment advisers registered with the Securities and Exchange Commission (SEC).

The proposed rules would require advisors to develop policies that would prevent advisors from being used for money laundering activities or terrorist financing. The proposal would allow some flexibility in order for a firm’s anti-money laundering policies to be risk-based and tailored to the services that the firm provides. The proposed rules would also require banks to report suspicious activity to FinCEN as required by the Bank Secrecy Act (BSA). Finally, under the proposed rules, investment advisors would be added to the BSA’s definition of a “financial institution”, and they would be subject to additional BSA requirements such as Currency Transaction filings.

Rules in Focus: FSR Releases ‘SIMPLE’ Solution to DoL’s Fiduciary Proposal

July 23, 2015

FSR submitted a comment letter this week urging the Department of Labor to forego adopting a proposed new definition of “investment advice fiduciary” under the Employee Retirement Income Security Act (ERISA). FSR argues that the proposal will adversely affect the ability of Americans to plan and save retirement by limiting how financial institutions are able to provide services to their investment clients.


Rules In Focus: SEC Pay Versus Performance Proposal Could Be ‘Confusing’, ‘Misleading’ to Investors

July 9, 2015

The Financial Services Roundtable submitted a comment letter to the Securities and Exchange Commission (SEC) concerning its proposed Pay Versus Performance disclosure rule. Although FSR supports meaningful disclosures to investors and market participants, FSR’s letter expresses concern that the SEC’s proposed rule takes an overly generalized approach that may provide investors with information that is confusing and misleading.

Rules In Focus: Supreme Court Rules Disparate Impact Claims are allowed under the Fair Housing Act

June 26, 2015

In a decision released yesterday on June 25, the U.S. Supreme Court upheld a lower court decision finding that disparate impact claims are allowed under the language of the Fair Housing Act (FHA). Under the FHA it is unlawful to, “refuse to sell or rent . . . or otherwise make unavailable or deny, a dwelling to a person because of race” or other protected characteristic. In a 5-4 ruling written by Justice Anthony Kennedy, the Court found that the wording of the FHA and its legislative history show that Congress intended the statute to allow plaintiffs to bring lawsuits against parties whose polices negatively impact the ability of members of a protected class to obtain housing. The ruling clarifies that proving actual malice or an intent to discriminate is not always necessary to bring a claim under the FHA.