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 Former Securities and Exchange Commission Chairman Arthur Levitt
told a group of U.S. state securities regulators that supporters of
the proposed rule need to do more to "push back" against a political
system that is "really rotten."
Levitt, the SEC's longest-serving chairman, was speaking at a
meeting of the North American Securities Administrators Association
(NASAA), with members from U.S. states, Canada and Mexico.
The Department of Labor has been working for several years to
overhaul regulations on how brokers advise clients on workplace
retirement plans such as 401(k)s and individual retirement accounts.
The plan is designed to reduce potential conflicts of interest
because advisers who offer rollover advice to retirees stand to
benefit financially. Brokers would have to act as fiduciaries, or
give advice that is in their clients' best interests. The move could
save investors billions of dollars, supporters said.
But many Republicans and some Democrats oppose the plan, asserting
that it would drive up costs, curb commissions and ultimately hurt
customers.
Critics, including the Securities Industry and Financial Markets
Association, have also complained the Labor Department rule could
conflict with a separate fiduciary-rule making effort under
consideration at the SEC that would harmonize rules between
broker-dealers and investment advisers.
In February, Missouri Republican Representative Ann Wagner,
re-proposed legislation to delay the Labor Department's efforts
until the SEC completes its separate rulemaking.
On Wednesday, the U.S. House Financial Services Committee will
debate the bill, which it expects will pass in a vote on Thursday, a
committee spokesman said.
In 2013, a prior bill by Wagner generated some bipartisan support
and passed in the House by a vote of 254-166.
In a statement on Monday, Representative Wagner called Levitt "a
career partisan bureaucrat" and said there were "millions of
Americans who would be adversely affected" by the Labor Department's
rule.
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"My legislation stops this Washington-knows-best assault on low- and
middle-income savers and their access to sound financial advice,"
the statement said.
The SEC should have been taking the lead on fiduciary initiatives
all along but political disagreements within the agency had stalled
progress, Levitt said.
Now, "Congress is saying 'give it to the SEC' because they know the
SEC is so politically divided that (the agency) can't get to the
issue until 2016," Levitt said. That is when Republicans hope to
control both Congress and the White House, said Levitt, whose
present roles include being a senior adviser at the Carlyle Group
LP.
An SEC spokeswoman declined to provide an immediate comment.
The Labor Department plan, in the works for five years, gained
national prominence in February, when President Barack Obama
announced his support for the proposed rules.
A broad coalition of groups, including those representing consumers,
workers and investors, have lobbied vigorously for the Labor
Department plan, said Barbara Roper, investor protection director of
the Consumer Federation of America, in a telephone interview.
The problem is that the securities industry has vastly more
financial resources to promote its views, Roper said.
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