The SEC has proposed to extend the sunset for the temporary principal trading rule under the Advisers Act by another two years to December 31, 2014.
Temporary rule 206(3)-3T, originally adopted in 2007, allows investment advisors that are dually registered as broker-dealers to sell stocks and bonds from their firm’s product inventory without making prior disclosure and getting prior written consent for each trade. Instead, they can provide disclosures on a prospective or annual basis and get oral consents.
The SEC indicated that another extension is necessary while the big-picture question of a uniform fiduciary standard for broker-dealers and investment advisers is being pondered.
“We believe the requirements of [the principal-trading rule], coupled with regulatory oversight, will adequately protect advisory clients for an additional limited period of time while we consider more broadly the regulatory requirements applicable to broker-dealers and investment advisers,” the SEC proposal states.
Apparently, fiduciary advocates are up in arms about the extension. I would be very interested to know from you whether the latest extension has significant practical implications for you.
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