ABA Outlines Considerations for Potential Investment Adviser Code of Conduct

As the Securities and Exchange Commission considers whether or not to propose a standard of conduct for investment advisers and broker-dealers, the American Bankers Association in a comment letter today outlined several key considerations for the SEC as it moves forward. The SEC is considering implementing a code of conduct partly in response to the Department of Labor’s final fiduciary rule, which greatly expanded the definition of “fiduciary” under the Employee Retirement Income Security Act and the Internal Revenue Code.

ABA commended the SEC for resuming its consideration of the proposed standard of conduct and urged the commission to coordinate its efforts with DOL to avoid inconsistencies with the DOL’s final rule. The association emphasized the importance of maintaining investor choice, noting that any standard of conduct should “distinguish sufficiently between advisory and customer-directed services so that both the broker-dealer/adviser and the customer understand the nature of the relationship and the services being provided.” It should also maintain investors’ ability to access educational information, ABA said. Finally, ABA urged the SEC to refer to the standard of conduct as a “best interest” standard rather than a “fiduciary” standard to reduce investor confusion over the term “fiduciary.” For more information, contact ABA’s Tim Keehan.


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