SEC, Rick Edelman, Consumer Federation Of America discussed on Ric Edelman


To the Rick Edelman show, we've been talking about the new regulation that the SEC just approved this week regulation, be I that's best interests. Supposedly saying that. Hey, thanks to this new regulation, stockbrokers are going to have to serve your best interests. Unfortunately the name is a bit misleading. If you take the word for it from not only one of the SEC's own commissioners, but AARP the consumer federation of America, the group of lawyers who represent claimants suing their stockbrokers, and the national organization of state securities regulators, all of them in agreement that the new regulation is misleading that in fact, it doesn't require stockbrokers to serve their clients, best interests, even though that's the name of the regulation. Well here at Financial Engines, we participated in the regulatory process, we submitted a comment letter to the SEC while they were debating and deliberating over the regulation. We met with SEC staff. And while we applaud the SEC's intent to increase protections for investors, we are, frankly, concerned that the new rules, do not go far enough to protect consumers. The new regulation, for example, does not define key terms. That uses the word recommendation, but it doesn't explain what that is. That uses the phrase best interest, but it doesn't define what that is. And there's no enforcement mechanism even if the to determine that somebody violated the regulation, there's no enforcement process. And the rule says the broker dealers must merely disclose their conflicts of interest, rather than avoid them. So what is my advice for you? Recognize that, despite this new rule which takes effect starting in two months becomes fully effective a year from now despite the fact that the rule is now in place, and, despite the fact that it is called regulation best interest and, despite the fact that brokers and broker dealers will now be running around the country doing all kinds of advertising marketing, and making claims and sales pitches and seminars that hey we observe the best interests rule..

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