The New Jersey Bureau of Securities has scheduled a July 17 public hearing for a proposed state regulation requiring financial professionals registered in New Jersey to act as fiduciaries when dealing with investors.
The bureau also extended the public comment period until July 18. The comment period had been scheduled to close on June 14, but the Bureau of Securities issued a notice Monday describing the extension and public hearing.
"The purpose of the public hearing is to take testimony from interested parties concerning data, arguments or views that raise a substantial issue as to the impact of the rule-making on the regulated community or the general public that has not been anticipated by the agency," said the notice issued by Christopher W. Gerold, bureau chief of the Bureau of Securities. The bureau is a unit of the division of consumer affairs, which is part of the state attorney general's office.
"To date, the division has received approximately 600 public comments on the fiduciary rule proposal," a spokeswoman for the division of consumer affairs wrote in an email Tuesday. "Because of the substantial public interest, the division has decided to hold a public hearing on the proposed rule. We extended the public comment period to accommodate that hearing."
The proposed regulation was announced in April. "Investors should be able to trust that they are not receiving conflicted advice when investing their hard-earned savings," Paul R. Rodriguez, acting director of the division of consumer affairs, said at the time.
The regulation would require greater responsibility for broker-dealers holding them to standards equal to those of investment advisers.
It was proposed before the Securities and Exchange Commission voted 3-1 on June 5 to approve standards of conduct rules — known as Reg BI — for financial professionals. These rules features a best-interest standard that requires brokers to put clients' financial interests ahead of their own and requires them to mitigate financial conflicts. Currently, brokers are subject to a suitability standard that means they must provide advice that is merely suitable to their clients' situations. Critics said the proposal is too ambiguous and does not establish a legally enforceable standard.
"Broadly speaking, these rules and interpretations address the obligations of broker-dealers and investment advisers when they provide investment advice and services to our Main Street investors," said SEC Chairman Jay Clayton, when commissioners voted for the rules.
Brian Croce contributed to this story.