August 7, 2018

Mr. Brent J. Fields
Secretary
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-1090

Re: Proposed Commission Interpretation Regarding Standard of Conduct for Investment Advisers, Investment Advisers Act Release No. 4889 (April 18, 2018) File No. S7-09-18

Dear Mr. Fields:

The Asset Management Group (“AMG”) of the Securities Industry and Financial Markets Association (“SIFMA”) appreciates the opportunity to provide our comments to the Securities and Exchange Commission (“SEC” or “Commission”) on the Commission’s proposed interpretation regarding the standard of conduct applicable to investment advisers, Investment Advisers Act Release No. 4889 (Apr. 18, 2018) (the “Proposed Interpretation”).

SIFMA AMG is the voice for the buy-side within the securities industry and broader financial markets, which serve millions of individual and institutional investors as they save for retirement, education, emergencies, and other investment needs and goals. Our members represent U.S. asset management firms whose combined global assets under management exceed $34 trillion. The clients of SIFMA AMG member firms include, among others, tens of millions of individual investors, registered investment companies, endowments, public and private pension funds, UCITS and private funds such as hedge funds and private equity funds.

The Proposed Interpretation is one of three sets of proposals that the Commission has issued that focus on the standards of conduct applicable to investment professionals and helping retail investors understand the differences between investment advisers and broker-dealers. The package of proposals includes proposed Regulation Best Interest, which would establish a standard of conduct for broker-dealers when making recommendations of securities transactions or investment strategies to retail customers,1 and proposed disclosure requirements and forms, including a brief relationship summary, intended to help retail investors understand the differences between investment advisers and broker-dealers, including the standards of conduct applicable to each, and help alleviate retail investor confusion about different types of financial professionals.2 The Commission issued the Proposed Interpretation, stating that in light of the comprehensive nature of its proposed set of rulemakings, it believed “it would be appropriate and beneficial to address in one release and reaffirm – and in some cases clarify  certain aspects of the fiduciary duty that an investment adviser owes to its clients under section 206 of the [Investment Advisers Act of 1940]” (the “Advisers Act”).3

SIFMA AMG welcomes the leadership role taken by the SEC to enhance the standards of conduct for broker-dealers and investment advisers to foster a regulatory system that best serves the interests of retail investors.4 As the principal federal regulator of broker-dealers and investment advisers, the SEC is the proper agency to update the regulatory framework that has served investors for decades. The SEC and its staff have been working on the issues underlying these proposals for many years.5 The SEC’s jurisdiction extends broadly and encompasses retirement as well as non-retirement accounts. Navigating the complex landscape is not an easy task and we commend the SEC and the staff for their work over many years to thoughtfully develop an approach that can ensure investor choice.

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1 See Regulation Best Interest, Exchange Act Release No. 83062 (Apr. 18, 2018), available at https://www.sec.gov/rules/proposed/2018/34-83062.pdf.

2 Form CRS Relationship Summary; Amendments to Form ADV; Required Disclosures in Retail Communications and Restrictions on the use of Certain Names or Titles, Exchange Act Release No. 83063 (Apr. 18, 2018), available at https://www.sec.gov/rules/proposed/2018/34-83063.pdf.

3 Proposed Interpretation at 5.

4 Chairman Clayton has emphasized the importance of the concerns of retail investors in this endeavor. See Statement at the Open Meeting on Standards of Conduct for Investment Professionals, Apr. 18, 2018 (Statement of SEC Chairman Jay Clayton), available at https://www.sec.gov/news/public-statement/clayton-statement-openmeeting-iabd-041818; see also Jay Clayton, SEC Chairman, “Statement on Public Engagement Regarding Standards of Conduct for Investment Professionals Rulemaking” (Apr. 24, 2018), available at https://www.sec.gov/news/public-statement/public-engagement-standards-conduct-investment-professionalsrulemaking (regarding the entire rulemaking package, stating that “[t]his rulemaking is designed to serve our Main Street investors”).

5 See, e.g., Study on Investment Advisers and Broker-Dealers As Required by Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Jan. 2011) available at www.sec.gov/news/studies/2011/913studyfinal.pdf (SEC staff recommended that the SEC engage in rulemaking to adopt a uniform fiduciary standard of conduct for broker-dealers and investment advisers); Angela A. Hung, et al., RAND Institute for Civil Justice, Investor and Industry Perspectives on Investment Advisers and Broker-Dealers (2008), available at https://www.sec.gov/news/press/2008/2008-1_randiabdreport.pdf (SEC-sponsored study concluded that many retail investors did not understand key differences between broker-dealers and investment advisers).