Asset managers focus on SEC compliance over DoL rule

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Convinced that the Labor Department's fiduciary rule will be derailed, asset managers are focusing instead on meeting the SEC's new reporting modernization rules, according to industry executives attending the latest Investment Company Institute conference in Palm Desert, California.

"Based on meetings here [the sentiment is] that the proposed DoL fiduciary rule is unlikely to pass in its current state, as it is currently postponed," says Stephanie Miller, senior vice president of fund administration business at SS&C Technologies.

Miller notes in her discussions with management executives at the ICI Mutual Funds and Investment Management conference, she heard a willingness to cut losses on DoL compliance spending.

"They are much less married to their investments and much more positive looking forward that the rules will not impact them as much," she says.

The Labor Department delayed the applicability date of the fiduciary rule by 60 days in order to complete a review of the regulation ordered by President Trump.

Attendees picked up on an uncommonly high level of uncertainty from regulators and industry professionals regarding how the DoL rule will evolve, says Ann Marie Swanson, director of Alaric Compliance Services.

The SEC released a letter outlining where the most common deficiencies occur.
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"Some panelists suggested the new administration might try to mitigate its impact by rolling back certain provisions or not enforcing them," she notes.

There was agreement among panelists that the DoL is likely to delay the fiduciary rule's applicability date, says ICI spokeswoman Rachel McTague.

"Later action by DoL to withdraw or modify the rule, based on is re-examination, would lead to significant market disruptions and confusion for retirement investors," McTague says.

Swanson adds that despite uncertainty about the fiduciary rule being repealed, the industry at large is still moving ahead with efforts to comply with the rule.

There's less uncertainty however about the SEC's reporting modernization rules, approved for adoption in October and whose implementation will take effect next June.

Alaric's Swanson says it's one reason why conference attendees were more focused on SEC compliance.

"We discussed how regulations such as the new Liquidity Rule (22e-4) will affect mutual funds and investment management companies, including the requirement to develop and implement a formal liquidity risk management program," she says.

Andrew Rogers, CEO of Hauppauge, New York–based Gemini Companies, says there is still much ground for firms to cover to meet the new SEC requirements for fund reporting.

"Rules around the liquidity rule are being discussed and there are many ideas about the roles of the Board, adviser, technology providers, and back office," Rogers says. "In addition, various new filings must be systematically generated to manage the amount of information required. I believe there is acceptance in the industry and a focus on best practice."

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Financial regulations Compliance SEC regulations Fiduciary Rule Mutual funds Donald Trump DoL ICI Northern Trust