Statement on Public Engagement Regarding Standards of Conduct for Investment Professionals Rulemaking

Last week, the Commission proposed for public comment a significant rulemaking package that would (1) require broker-dealers to act in the best interest of their retail customers; (2) reaffirm and in some cases clarify the fiduciary duty owed by investment advisers to their clients; and (3) require both broker-dealers and investment advisers to clarify for all retail investors the type of investment professional they are, and key facts about their relationship, as well as prohibit the use of “adviser” and “advisor” in certain circumstances, as such titles may mislead retail investors.

This rulemaking is designed to serve our Main Street investors.  In particular, it is intended to bring legal requirements and mandated disclosure in line with investor expectations.  I found engagement directly with retail investors and the financial professionals who serve them during the pre-rulemaking period, including a roundtable in St. Louis, to be tremendously useful.  I believe we need to continue that effort by reaching out directly to investors and other market participants across the country.

I have asked the SEC staff to put together a series of roundtables, focused on the retail investor, to be held in different cities around the country — including in Atlanta, Denver, Houston, and Miami.  These roundtables are intended to help us gather much-needed information straight from those who will be most directly impacted by our rulemaking.  I intend to participate personally in many of these roundtables.

These efforts are one component of a broad engagement effort on this issue.  For example, we invite investors to provide their views on key questions that will help us shape the disclosure designed for them.  Investors may respond to these key questions using a short, fillable form.  Moreover, the SEC’s Investor Advocate is in the process of performing investor testing, and we anticipate making the results of that investor testing available in the public comment file.

More information about these events will be announced in the upcoming weeks.  If you are interested in participating in one of these events, staff contact information will be made available in a forthcoming press release; we urge you to reach out, and we will seek to accommodate you.