August 6, 2010
I wnat to urge the SEC to back away from imposing a ficuiary responsibility on registered representatives.
I currently spend a great deal of my time working on compliance. ABout 50% of the paperwork I do is suitability related at the present time.
The company I work for is Thrivent Financial for Lutherans and in addtion to suitability requirements I have other compliance issues and tasks. My compnay is relentless about making sure suitability is documented and appropiate.
I am not sure how making me a ficuiary for all functions would change the business. I am sure it would add to the already burdensome requirements i face daily.
Many of the most egregious cases of fraud in my county of Chhester Pennslyvania could have easily been discovered by an intern working for Insurance commissioner. There were two cases locally where there was a long standing ponzi schemes involving several hunderds of millions combined.
In both instances the respresentatives were not licensed but had offices and advertised. If the insurance commissioner had merely crosschecked the list of licensed peersons/ firms against a phone registry they would have been on the fraud.
It is my expereince that registered reps currently face significant challenges keeping up with current compliance issues. Switching to a fee based system of compensation in line with that of a fidicuary would deprive many middle income persons from receiving good and competent advise.
The current system is proactive. Companies go to great lengths to train reps and insure suitability. They in fact catch and report most of abuses in the system.
Most of the abuses that occur in the current system with individuals are caused by dishonest reps and no amount of oversight will prevent all of these abuses. if the SEc just enforced the rules on the books we would have far fewer problems.