WASHINGTON – The SEC issued today a final Regulation Best Interest package that leaves working people with fewer, not more, protections.
In response, Patricia Smith, Senior Counsel for the National Employment Law Project, released the following statement:
“Working people who invest their retirement savings have a legitimate expectation that the advice they receive from financial advisers is designed to protect their interests and maximize their benefits. However, there are too many incentives for brokers to recommend investments not in their customers’ best interests. As a result, investors, including working people who rely on retirement savings, are losing millions of dollars in forgone returns and, in some cases, even their principal. The losses hurt workers in low-wage industries and other small savers the most since they can least afford to bear them.
“Today the SEC issued a final Regulation Best Interest package that falls far short of what workers and investors need and deserve. Instead of improving protections for working people, it will leave them with fewer protections in important areas. The SEC’s Regulation Best Interest will make it easier, not harder, for brokers to market themselves as trusted advisers committed to putting their customers’ interests first. However, it will not actually require them to recommend the investments they reasonably believe are the best available option for the investor. Nor will it effectively rein in the incentives brokers have to recommend investments that are not in their customers’ best interests. Instead, this rule will weaken protections that currently apply under state fiduciary standards – that place customers in long-term relations of trust and confidence with their brokers.
“Today’s action by the SEC is actually a step backwards for investor protections, and workers who invest their precious earnings should not be fooled by the SEC’s claims to the contrary.”
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The National Employment Law Project is a non-partisan, not-for-profit organization that conducts research and advocates on issues affecting low-wage and unemployed workers. For more about NELP, visit www.nelp.org. Follow NELP on Twitter at @NelpNews.
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