U.S. pro­poses rules for bro­kers

Los Angeles Times - - BUSINESS -

Bro­kers who man­age Amer­i­cans’ re­tire­ment ac­counts may soon be re­quired to put in­vestors’ in­ter­ests first un­der new re­stric­tions pro­posed by the U.S. gov­ern­ment.

The La­bor Depart­ment opened the rules to public com­ment for 75 days. The Obama ad­min­is­tra­tion has put its weight be­hind the move. Against a back­drop of in­tense op­po­si­tion from the fi­nan­cial in­dus­try on an ear­lier pro­posal, ad­min­is­tra­tion of­fi­cials took pains to re­as­sure the in­dus­try that the new frame­work wouldn’t end the way bro­kers do busi­ness or pro­hibit them from re­ceiv­ing com­mis­sions or other fees.

The pro­posal would pro­vide “guardrails but not strait­jack­ets” for pro­tect­ing Amer­i­cans’ re­tire­ment in­vest­ments, La­bor Sec­re­tary Thomas Perez said.

The changes would put bro­kers — who sell stocks, bonds, an­nu­ities and other in­vest­ments — un­der the stricter re­quire­ments for reg­is­tered fi­nan­cial ad­vis­ers. Fierce de­bate and lob­by­ing over the pro­posal is ex­pected.

The stricter rules could al­ter the types of in­vest­ments a bro­ker rec­om­mends to re­tire­ment ac­count clients. Their ad­vice could move away from riskier in­vest­ments. And bro­kers will have to tell clients when they have a con­flict of in­ter­est re­gard­ing a fi­nan­cial prod­uct — like re­ceiv­ing fees — that could pre­vent them from putting a client’s in­ter­est first in rec­om­mend­ing it.

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