The House on Tuesday could vote on a legislative amendment that would prohibit the SEC from implementing its new standards-of-conduct package.
U.S. Rep. Maxine Waters, D-Calif., chairwoman of the House Financial Services Committee and a vocal opponent of the Securities and Exchange Commission package, is behind the action. On Monday, she proposed an amendment to the Financial Services and General Government Appropriations Act of 2020, a bill that appropriates government spending for next year, that would prohibit the SEC from spending any money to implement the standards-of-conduct package.
The House Rules Committee accepted the amendment a few hours later.
The amendment states: "None of the funds made available by this Act may be used by the Securities and Exchange Commission to implement, administer, enforce, or publicize the final rules and interpretations of" the package, commonly known as Reg BI.
SEC commissioners approved the package on June 5 in a 3-1 vote. It features four components, including its centerpiece best-interest standard, which compels brokers to put clients' financial interests ahead of their own and requires them to mitigate financial conflicts. Critics say the measure is too ambiguous and does not establish a legally enforceable standard.
In a statement following Reg BI's passage, Ms. Waters said the rule "ignores the explicit will of Congress and fails to require all financial professionals to abide by a strong, uniform fiduciary standard of care when providing investors with investment advice." She also urged the SEC to "rescind this rule and put the interests of savers and retirees first."
The Insured Retirement Institute in Washington, a proponent of Reg BI, opposes Ms. Waters' amendment. "We believe that Regulation Best Interest should move forward and be given time to work," said Dan Zielinski, IRI's vice president of strategic communications, in a statement. "The just-approved regulation will offer a substantial enhancement to investor protections over current law. The new requirements on industry are considerable and the existing enforcement mechanisms applicable to Reg BI are rigorous."