(Bloomberg) -- There’s a gap between the White House and Wall Street’s main regulator over a push to tighten broker rules. To the investment industry, it’s an opening to exploit.

The SEC was missing last month when the White House unveiled the plan that roiled the financial industry. The proposal, crafted by the Labor Department, would require brokers to put retirement savers’ interests ahead of their own in an effort to eliminate what it calls biased advice that costs investors billions of dollars annually.

The SEC, which oversees the brokerage industry as a whole, has studied for years whether to impose a broader regulation that would cover all investors, not just those saving for retirement. The industry says the decision to move ahead without the SEC would burden brokers with two sets of rules -- one for retirement accounts, one for all others -- and confuse investors.

“If the SEC saw a problem with how investment advice is given, I’m sure they would act on it,” Francis Creighton, chief lobbyist of the Financial Services Roundtable, said in an interview. “This is squarely in the SEC’s jurisdiction.”

The White House’s move leaves Mary Jo White, chair of the independent SEC, in a tough spot, weighing whether to follow the administration or forge her own path. Already she has been barraged by fellow commissioners, industry executives, consumer groups and lawmakers. Her silence ensures that the SEC will be drawn into the middle of what promises to be one of the most bruising Wall Street lobbying battles in years.

FIDUCIARY DUTY

Under current rules, brokers must make “suitable” recommendations to clients, meaning the investments have to fit the customer’s needs and tolerance for risk. The Labor Department rule would impose a so-called fiduciary duty requiring brokers who manage retirement money to put their clients’ interests first.

All eyes are now on White, who said in November that she planned to disclose her position in the coming months. She is considering delivering a speech on the issue in the coming weeks, according to two people familiar with the matter.

White has been studying options for new rules since late last year, when the agency’s staff presented her with alternatives, including rules that would hold brokers and investment advisers to the same fiduciary standard, the people said. That option was endorsed by SEC staff in a 2011 report.

The staff also suggested a watered-down measure, such as requiring brokers to disclose conflicts of interest on a form filed with the SEC, the people said. They told White that a strict fiduciary-duty rule would be staunchly opposed by Wall Street.

5 YEARS

The Labor Department has spent the past four years trying to resurrect a fiduciary rule after its first version collapsed in 2011 under industry opposition and bipartisan criticism. Though the details haven’t been released, President Barack Obama endorsed the plan last month at an event hosted by AARP. The department is set to issue the proposal for public comment in the next few months.

The Labor Department argues that investors are vulnerable because brokers often receive compensation from mutual funds and other companies in return for selling their products. White House economists also raised alarms about the practice, saying investors lose as much as $17 billion a year to inferior products and “backdoor fees.”

Jason Surbey, a spokesman for the Labor Department, said the new plan has been developed with the SEC’s help. Labor Secretary Thomas Perez and White have worked together closely throughout the process, he said. Gina Talamona, a spokeswoman for White, declined to comment.

In an interview last week, White said the SEC and the Labor Department aren’t moving jointly because they have different responsibilities and legal authorities. While the Labor Department answers to the White House, the SEC does not.

Any SEC rules have to “respect those differences,” she said.

LOBBYING CAMPAIGN

White also said she doesn’t feel any political pressure to speed up progress on new rules. “We’re very focused on our own decision whether to proceed,” she said.

Almost as soon as Perez announced the proposal last month, Wall Street groups seized on the SEC-Labor Department split as part of a ramped-up lobbying campaign.

In one letter sent around by an industry group last week, Senator John Boozman of Arkansas and Representative Ander Crenshaw of Florida, both top members of appropriations panels, told the White House that the SEC is better positioned to write new rules for brokers and the Labor Department should stand down until the commission acts.

“We strongly believe the DOL rule will significantly harm low and middle-income investors seeking financial advice regarding their retirement and will cause unintended consequences,” the two lawmakers wrote.

In the House, Representative Ann Wagner, a Missouri Republican, is pushing legislation that would require the SEC to propose rules first.

'APPEASING' OBAMA

Along with congressional pressure, White is also dealing with differing opinions among her fellow commissioners.

The SEC’s two Republicans, Daniel Gallagher and Michael Piwowar, openly oppose a new rule.

“The fiduciary duty debate lies squarely in the realm of issues contrived by and urged upon the SEC by special interests,” Gallagher said. “There is no time, and no proven need, to pursue a fiduciary-duty rulemaking, unless of course we are focused more on appeasing the White House than on being an independent agency.”

On the Democratic side, Commissioner Luis Aguilar supports writing new rules as soon as possible. He said in an interview that he hasn’t seen “any tangible movement” on the rules and isn’t convinced that the SEC will advance its own plan.

For now, the SEC is conducting special exams of brokers who advise senior citizens and retirement investors. The effort targets excessive fees and inappropriate recommendations and covers how brokers advise investors to roll over assets from 401(k) plans into IRAs, Kevin Goodman, an SEC official, said at a conference last month.

Some consumer advocates who have talked to White say they see signs that the SEC may move ahead with its own rule.

“Even with a very full agenda of issues, she’s been giving attention to it, and that’s a good thing,” said Barbara Roper, director of investor protection at the Washington-based Consumer Federation of America, who met with White in early February.

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