Statement from SIFMA CEO Kenneth E. Bentsen, Jr. in Response to Remarks By FINRA Chairman and CEO Richard Ketchum on a Best Interest Standard

Release Date: May 27, 2015
Contact: Katrina Cavalli, 212-313-1181, [email protected]

Statement from SIFMA CEO Kenneth E. Bentsen, Jr. in Response to Remarks By FINRA Chairman and CEO Richard Ketchum on a Best Interest Standard

New York, NY, May 27, 2015 – SIFMA today issued the following statement from president and CEO Kenneth E. Bentsen, Jr. in response to the remarks made by FINRA chairman and CEO Richard Ketchum on the importance of a best interest standard:

“SIFMA has long supported the concept of a best interest standard and Mr. Ketchum articulated key elements that are important to ensure that customers’ interests do indeed come first–through identification and management of conflicts, targeted fee and product risk disclosure, and effective management of compensation incentives to registered persons.

“While the SEC has not yet acted under the authority explicitly granted to them by Congress, it is worth noting that the rules and precedents governing broker-dealers’ conduct with respect to retail investors, both in retirement and non-retirement accounts, have migrated toward a ‘best interest standard.’ FINRA has been refining its definition of suitability under Rule 2111 and most recently through guidance related to 401(k) and similar plan rollovers under Regulatory Notice 13-45 to require brokers to put clients’ best interests ahead of their own. Further, investor claims in FINRA arbitration routinely include a fiduciary duty component.

“SIFMA believes the Department of Labor’s proposal imposes conditions and obligations far beyond what a best interest standard requires, the result of which will limit investor choice and increase investor costs, unnecessarily so in our opinion. Equally troubling is that this DOL proposal underscores a failure in the public policy making process. Rather than adopting a policy prerogative that will apply across the entire retail market place, we are headed in a direction of bifurcated rules, with compliance and disclosure regimes imposed on the same market participants and investors from different regulators. It seems illogical that we cannot address this in a uniform manner on behalf of the investing public.”