Floor Vote Prep | H.R. 2374, the Retail Investor Protection Act
Posted by on October 27, 2013

H.R.2374, the Retail Investor Protection Act, was introduced by Rep. Ann Wagner and is expected on the House floor this week. Here's what you need to know:


Excessive and unnecessary regulations hurt our economy and increase costs and restrict access to products and services, especially to those with low or moderate incomes.


Section 913 of the Dodd-Frank Act permits, but does not require, the Securities and Exchange Commission (SEC) to issue rules that extend fiduciary (legal) responsibilities that currently apply to investment advisers to broker-dealers. Broker-dealers are already held to a standard of care known as suitability and they provide a variety of financial products and services to customers. 

Both the SEC and the Department of Labor (DoL) have indicated they are moving forward with rulemakings that would apply new fiduciary responsibilities to broker-dealers when they provide advice to retail, or individual, investors like families saving for retirement or college.

Many have expressed concerns that these rulemakings could increase costs and limit the availability of products and advice for retail investors. In fact, the SEC itself acknowledges that the costs of this action could “ultimately be passed on to retail investors in the form of higher fees or lost access to services and products.” 

Bottom Line:

The Dodd-Frank Act was not written in stone or handed down from Mount Sinai.  Congress has an obligation to amend, fix or repeal provisions whose costs outweigh purported benefits.


The bipartisan H.R. 2374 – which the Financial Services Committee reported by a 44-13 (.pdf) vote on June 19, 2013 –  would require the SEC to consider all other options before moving forward on a fiduciary (legal) standard for broker-dealers.  It would require the SEC to identify whether expanded fiduciary standards would result in less access to financial products and services for retail investors.  It would also require the DoL to wait until the SEC completes its rulemaking before proposing any rules altering the definition of a fiduciary.  

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