Senator Elizabeth Warren said Friday that the U.S. Labor Department should press ahead with brokerage industry reforms, and not be deterred by the Securities and Exchange Commission's plans to adopt its own separate rules.
President Barack Obama, with frequent Wall Street critic Warren at his side, last month called on the Labor Department to quickly move forward to tighten brokerage standards on retirement advice, lending new momentum to a long-running effort to implement reforms aimed at reducing conflicts of interest and "hidden fees."
But that effort could be complicated by a parallel track of reforms by the SEC, whose Chair Mary Jo White on Tuesday said she supported moving ahead with a similar effort to hold retail brokers to a higher "fiduciary" standard.
"I want to see the Department of Labor go forward now," Warren told Reuters in an interview Friday.
"There is no reason to wait for the SEC. There is no question that the Department of Labor has the authority to act to ensure that retirement advisers are serving the best interest of their clients."
Warren said that while she has no concerns with the SEC moving forward to write its own rules, she fears its involvement may give Wall Street a hook to try to delay or water down a separate ongoing Labor Department effort to craft tough new rules governing how brokers dole out retirement advice.
She also raised questions about White's decision to unveil her position at a conference hosted by the Securities Industry and Financial Markets Association (SIFMA), a trade group representing the interests of securities brokerage firms.
Not only is the SEC the lead regulator for brokers, but unlike the Labor Department, it is also bound by law to preserve brokers' commission-based compensation in any new fiduciary rule.
"I was surprised that (Chair) White announced the rule at a conference hosted by an industry trade group that spent several years and millions of dollars lobbying members of Congress to block real action to fix the problem," Warren said.
Warren, a Massachusetts Democrat who frequently challenges market regulators as too cozy with industry, stopped short of directly criticizing White.
The SEC and SIFMA both declined to comment on Warren's comments.
SIFMA has strongly opposed the Labor Department's efforts, fearing its rule will contain draconian measures that would cut broker profits, and in turn, force brokers to pull back from offering accounts and advice to American retirees. It has long advocated for the SEC to take the lead on a rule that would create a new uniform standard of care for brokers and advisers.
The SEC has said it has been coordinating with the Labor Department on the rule-writing effort, but on Tuesday White also acknowledged that the two can still act independently of one another because they operate under different laws.
The industry and reform advocates have been waiting now for years to see whether the SEC would move to tighten standards.
Warren expressed some skepticism on Friday about whether the SEC will ever in fact actually adopt a rule, saying that for years the agency has talked about taking action, but has not delivered.
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