Retail Investor Protection Act of 2016

Bill: 114-s-2497
Sponsor: full_name: Sen. Blunt, Roy [R-MO]
Introduced: 2016-02-04
Policy area: Finance and Financial Sector
Subjects: Administrative law and regulatory procedures

Banking and financial institutions regulation

Congressional oversight

Department of Labor

Employee benefits and pensions

Financial services and investments

Government information and archives

Securities and Exchange Commission (SEC)
Latest action: action_date: 2016-02-04
text: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

Summaries:
action_date: 2016-02-04
action_desc: Introduced in Senate
text: <p><b>Retail Investor Protection Act</b></p> <p> This bill prohibits the Secretary of Labor from prescribing any regulation under the Employee Retirement Income Security Act of 1974 (ERISA) defining the circumstances under which an individual shall be considered a fiduciary until 60 days after the Securities and Exchange Commission (SEC) issues a final rule governing standards of conduct for brokers and dealers under specified law.</p> <p>The Securities Exchange Act of 1934 is amended to prohibit the SEC from promulgating a rule establishing an investment adviser standard of conduct as the standard of conduct of brokers and dealers before it reports to certain congressional committees whether:</p> <ul> <li>retail investors and other customers are being harmed by brokers or dealers operating under different standards of conduct than those applicable to investment advisers under the Investment Advisers Act of 1940;</li> <li>alternative remedies will reduce any confusion or harm to retail investors due to brokers or dealers operating under such different standards of conduct;</li> <li>adoption of a uniform fiduciary standard of conduct for brokers, dealers, and investment advisers would adversely impact their commissions and the availability of proprietary products offered by brokers and dealers, as well as the ability of brokers and dealers to engage in principal transactions with customers; and</li> <li>adoption of a uniform fiduciary standard of conduct for brokers or dealers and investment advisers would adversely impact retail investor access to personalized, cost-effective investment advice and recommendations. </li> </ul> <p>The SEC shall: (1) publish in the Federal Register formal findings that such rule would reduce retail customer confusion or harm due to different standards of conduct applicable to brokers, dealers, and investment advisers; and (2) consider, when proposing rules, the differences in the registration, supervision, and examination requirements applicable to brokers, dealers, and investment advisers.</p>

tv_txt: II 114th CONGRESS 2d Session S. 2497 IN THE SENATE OF THE UNITED STATES February 4, 2016 Mr. Blunt (for himself, Mr. Crapo , Mr. Daines , Mr. Kirk , Mr. Isakson , and Mrs. Capito ) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Securities Exchange Act of 1934 to provide protections for retail customers, and for other purposes.

1. Short title This Act may be cited as the Retail Investor Protection Act of 2016 . 2. Stay on rules defining certain fiduciaries During the period beginning on the date of enactment of this Act and ending on the date that is 60 days after the date on which the Securities and Exchange Commission issues a final rule relating to standards of conduct for brokers and dealers under section 15(m) of the Securities Exchange Act of 1934 ( 15 U.S.C. 78o(m) ), as redesignated by section 3 of this Act, the Secretary of Labor may not issue any proposed or final regulation under the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1001 et seq. ) defining the circumstances under which an individual is considered a fiduciary with respect to standards of conduct for brokers and dealers. 3. Amendments to the Securities Exchange Act of 1934 Section 15 of the Securities Exchange Act of 1934 ( 15 U.S.C. 78o ) is amended— (1) by redesignating the second subsection (k) (relating to standard of conduct) through subsection (o) as subsections (m) through (q), respectively; and (2) in subsection (m), as so redesignated, by adding at the end the following: (3) Requirements before rulemaking The Commission may not promulgate a rule under paragraph (1) before providing a report to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate describing whether— (A) retail investors (and other customers that the Commission may provide) are being harmed by brokers or dealers operating under different standards of conduct than the standards that apply to investment advisers under section 211 of the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–11 ); (B) alternative remedies will reduce any confusion or harm to retail investors due to brokers or dealers operating under different standards of conduct than the standards that apply to investment advisers under section 211 of the Investment Advisers Act of 1940 ( 15 U.S.C. 80b–11 ), including— (i) simplifying the titles used by brokers, dealers, and investment advisers; and (ii) enhancing disclosure surrounding the different standards of conduct applicable to brokers, dealers, and investment advisers; (C) the adoption of a uniform fiduciary standard of conduct for brokers, dealers, and investment advisers would adversely impact the— (i) commissions of brokers and dealers; (ii) availability of proprietary products offered by brokers and dealers; and (iii) ability of brokers and dealers to engage in principal transactions with customers; and (D) the adoption of a uniform fiduciary standard of conduct for brokers or dealers and investment advisers would adversely impact retail investor access to— (i) personalized and cost-effective investment advice; (ii) recommendations about securities; or (iii) the availability of the advice and recommendations described in clauses (i) and (ii). (4) Economic analysis The conclusions of the Commission contained in the report described in paragraph (3) shall be supported by economic analysis. (5) Requirements for promulgating a rule The Commission shall publish in the Federal Register, with the rule promulgated under paragraph (1), formal findings that the rule would reduce confusion or harm to retail customers (and other customers that the Commission may by rule provide) due to different standards of conduct applicable to brokers, dealers, and investment advisers. (6) Requirements under Investment Advisers Act of 1940 In proposing rules under paragraph (1) for brokers or dealers, the Commission shall consider the differences in the registration, supervision, and examination requirements applicable to brokers, dealers, and investment advisers. .