Statement of Kevin Carroll, Managing Director and Associate General Counsel, Securities Industry and Financial Markets Association

Before the U.S. House of Representatives Committee on Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets

Hearing On: Putting Investors First? Examining the SEC’s Best Interest Rule

March 14, 2019

Introduction

Chair Maloney, Ranking Member Huizenga and members of the Subcommittee:

My name is Kevin Carroll. I am a Managing Director and Associate General Counsel at the Securities Industry and Financial Markets Association (“SIFMA”).1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets.

Thank you for the opportunity to submit SIFMA’s views in connection with this important hearing. SIFMA supports strong, substantive conduct standards for broker-dealers (“BDs”) that put the best interest of the client first.

SIFMA has a consistent and long-standing record of support for heightened conduct standards for BDs that enhance investor protection.

SIFMA has a consistent and long-standing record of support for heightened conduct standards for BDs. Our support predates the passage of the Dodd-Frank Act. In fact, over the past ten years, our written advocacy on this important issue has included Congressional testimony on five occasions (and now six) 2 seven comment letters to the SEC,3 and one comment letter to FINRA.4

SIFMA’s members support higher standards because their client relationships are their greatest asset. As a result, our members have a strong vested interest in acting in the best interest of their clients. Thus, it is fair to say that SIFMA’s members represent not only the industry’s interest but also – to a significant extent – the voice and best interest of investors generally.

1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate on legislation, regulation and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.

2 SIFMA testimony before the Senate Banking Committee (Mar. 10, 2009), available at http://www.sifma.org/issues/item.aspx?id=1510; SIFMA testimony before the House Financial Services Committee (Jul. 17, 2009), available at http://www.sifma.org/issues/item.aspx?id=1515; SIFMA testimony before the House Financial Services Committee (Oct. 6, 2009), available at http://www.sifma.org/issues/item.aspx?id=1519; SIFMA testimony before House Financial Services Committee (Sep. 13, 2011), available at http://www.sifma.org/issues/item.aspx?id=8589935390; SIFMA testimony before House Financial Services Committee (Jun. 6, 2012), available at http://www.sifma.org/issues/item.aspx?id=8589938957.

3 SIFMA comment to SEC (Aug. 30, 2010), available at https://www.sifma.org/issues/item.aspx?id=22263; SIFMA & Oliver Wyman comment to SEC (Nov. 1, 2010), available at http://www.sifma.org/issues/item.aspx?id=21999; SIFMA & Oliver Wyman comment to SEC (Nov. 17, 2010), available at http://www.sifma.org/issues/item.aspx?id=22336; SIFMA comment to SEC (Jul. 14, 2011), available at http://www.sifma.org/issues/item.aspx?id=8589934675; SIFMA comment to SEC (May 4, 2012), available at https://www.sifma.org/issues/item.aspx?id=8589938634; SIFMA comment to SEC (Jul. 5, 2013), available at https://www.sifma.org/issues/item.aspx?id=8589944317; SIFMA comment to SEC (Jul. 21, 2017), available at https://www.sifma.org/resources/submissions/standards-of-conduct-for-investment-advisers-and-broker-dealers/.

4 SIFMA comment to FINRA (Dec. 3, 2010), available at http://www.sifma.org/issues/item.aspx?id=22482. SIFMA’s work product also includes two economic study reports quantifying the costs and expenses under various approaches, two reports providing a detailed roadmap for SEC rulemaking under Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), a robust cost-benefit analysis, and proposed rule text.