During a Senate Appropriations Subcommittee hearing this week, Senator Jerry Moran (R-KS) questioned SEC Chair Mary Jo White about the Department of Labor’s recently proposed rule requiring anyone who provides retirement investment advice to act solely in the best interests of their clients. Chair White highlighted that the SEC and DOL each have a separate and important mission when it comes to the standards that apply to financial advisers. But Jaret Seiberg, a policy analyst at Guggenheim Securities, was apparently watching an entirely different hearing. He came away with an interpretation of Chair White’s testimony that’s just not based on the facts.

Somehow, Mr. Seiberg drew the conclusion that Chair White “has concerns with the Labor Department proposal and what it could mean for middle-income and lower-income workers,” and heard her testimony as evidence that “the SEC represents the industry’s best hope to get the Labor Department to either shelve its plan or to overhaul it.” In reality, Chair White neither said nor implied anything of the sort. She reiterated a number of points that reflect her respect for the DOL’s rulemaking effort:

• The DOL and the SEC “are separate agencies with separate statutory mandates” and the DOL rule proposal relates to the DOL’s “important” mandate under ERISA;
• The SEC has worked closely “in providing extensive technical assistance” to the DOL since the beginning of the process, especially about the “broker-dealer model” and about “the impact that various ways of defining a fiduciary duty could have on the availability of reliable reasonably priced services . . . particularly at the low end;” and
• In her personal view, the SEC “should proceed” with a rule of its own that would enhance protections for investors receiving advice.

Chair White also noted that the SEC’s statutory authority to impose a uniform fiduciary duty sets “its own parameters that take into account the broker-dealer business model,” allowing commission compensation, for example. Of course, the DOL rule proposal also accommodates the broker-dealer business model and allows for commission compensation.

And when questioned about the 75-day comment period that the DOL has established for its rule proposal, Chair White voiced no objections about that time frame, pointing out that the issue has actually been “under study for a long time at the Department of Labor.”

In reality, nothing Chair White said in her testimony yesterday suggests any hostility to the DOL rule proposal or a desire to see it shelved or overhauled. Quite the opposite.

The Department of Labor is taking a major step forward in protecting workers and retirees. But some in the financial services industry have made the defeat of this rule their number one priority. It’s clear they’ll continue using false attacks to stop the rule from moving forward.