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NJ to Hold Hearing on Proposed Fiduciary Standards

Fiduciary Rules and Practices

Not wasting any time, the Garden State has announced that it will hold a July 17 hearing in connection with its proposed new fiduciary standards.

According to an announcement in the New Jersey Register, the Bureau of Securities also simultaneously announced that it is extending the comment period on the proposal until July 18. The comment period was originally scheduled to end on June 14.

For the public hearing, the Bureau plans to take testimony from interested parties concerning data, arguments or views that raise substantial issues as to the rulemaking’s impact on the regulated community or general public that has not been anticipated by the agency. Requests to speak should be submitted by July 10, based on the format outlined in the Register. 

First proposed on April 15, the regulation would establish the common law fiduciary duty and apply it to broker-dealers and agents, and to codify it for investment advisers and investment adviser representatives, requiring such professionals registered with the Bureau to place their customers’ interests above their own when recommending securities or providing investment advice.

The comment-period extension comes as the American Retirement Association (ARA) submitted its comment letter on the June 14 deadline, expressing support for the proposed regulation’s recognition of ERISA preemption and recommending that the Bureau retain this exclusion when the proposed regulation is finalized.

An industry trade letter urged the New Jersey Bureau to pause its rulemaking process, review the SEC’s Reg BI and reevaluate its current proposal before deciding whether it is necessary to proceed with an additional state regulation. “This is especially critical, as the creation of overlapping, duplicative or potentially conflicting requirements could create serious issues for the industry – particularly if such rules go into effect across multiple states, which would likely lead to increased investor confusion and undermine the intent of federal law,” the letter states. 

New Jersey’s hearing and comment period extension comes just after Massachusetts’ Secretary of the Commonwealth William Galvin announced that his Securities Division is seeking preliminary comments on a proposed regulation that would apply a fiduciary conduct standard on broker-dealers, agents, investment advisers, and investment adviser representatives when dealing with their customers and clients. Galvin had stated that he believes the SEC’s rule fall short of the standard he deems necessary. Nevada is also considering a separate fiduciary standard, while Maryland – which was considering doing so – has decided not to.