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Compliance August 30, 2021
Consumer Protection Motivates Barbara Roper’s Move to SEC
SEC Chair Gary Gensler says her focus as a senior adviser will be on issues relating to retail investor protection, including broker and adviser oversight and examinations.
Reported by John Manganaro
Last week, the U.S. Securities and Exchange Commission (SEC) announced it has appointed Barbara Roper to the role of senior adviser to SEC Chairman Gary Gensler.
In announcing her transition, the SEC says Roper will focus on issues relating to retail investor protection, including policy development and the oversight and examination of broker/dealers (B/Ds) and investment advisers. Such issues have come to define the efforts of the SEC—as well as the U.S. Department of Labor (DOL)—under the Biden administration.
Roper heads to the SEC after a 35-year career at the Consumer Federation of America (CFA). In a statement to PLANADVISER, CFA Executive Director Jack Gillis says Roper has “likely been one of the most influential and effective protectors of the American investor in recent history.
“CFA is so proud of her efforts, as well as her selection to carry on her work at the SEC in support of SEC Chairman Gensler,” Gillis continues. “Her efforts to institutionalize a fiduciary responsibility in the financial marketplace is legendary and has served as the benchmark for those interested in a healthy, responsible and fair financial marketplace.”
Given the high praise from the head of the CFA, which aims to protect the interests of consumers across all sectors of the U.S. economy, it is reasonable to expect Roper will push for stronger rules and regulations during her forthcoming SEC tenure. Indeed, in a statement confirming Roper’s move, Gensler calls Roper “a champion for investors [who] will provide invaluable counsel on behalf of the American public.”
Gensler’s statement notes that he and Roper have substantial prior experience collaborating on ambitious, game-changing financial market policies. Most notably, both worked on the Sarbanes-Oxley Act and the major market reforms of the Dodd-Frank Act.
“I’m excited to join the SEC and Gensler’s leadership team,” Roper says of her move to the SEC. “I’ve dedicated my career to ensuring that our capital markets work for the average investor. With investor protection at the core of the SEC’s mission, I’m looking forward to bringing that same focus on the needs of individual investors to my work for the SEC.”
The SEC says that during her time at the CFA, Roper was recognized as a spokeswoman on investor protection issues, particularly the standards that apply to investment professionals whom investors rely on for advice and recommendations. For example, last year, Roper filed on behalf of the CFA a comment letter that sharply criticized the updated DOL fiduciary rule framework put in place under then-President Donald Trump and then-SEC Chairman Jay Clayton.
“This is a regulatory package being rushed through by the Department of Labor in the guise of improving retirement investment advice for workers and retirees,” Roper wrote. “It would instead benefit powerful financial firms at retirement savers’ expense. This regulatory package is a multibillion-dollar transfer of wealth from the retirement accounts of American working families to the wealthiest, most powerful financial firms. Instead of strengthening protections for workers and retirees, it makes it easier for financial firms to profit unfairly at their expense.”
Roper’s argument was that the DOL regulatory package consists of two components “which work together to make it easier for financial firms to evade any fiduciary obligation” and to weaken the fiduciary standard when it does apply.
Roper wrote that she thought the new package included “a final rule reinstating a 1975 regulatory definition of fiduciary investment advice that it is so riddled with loopholes that it enables firms to decide for themselves when and if they want to be held to a fiduciary standard, as well as a proposed new exemption, modeled on the Securities and Exchange Commission’s weak, non-fiduciary Regulation Best Interest [Reg BI], which would enable firms providing retirement investment advice to engage in a wide range of conflicts of interest without adequate safeguards to prevent those conflicts from tainting their advice.”
Though her comments broadly criticized the DOL’s decisionmaking, Roper did have a few positive points to make.
“Saying that rollovers in the context of an ongoing relationship constitute fiduciary investment advice is a small step in the right direction, but it is a far cry from unequivocally covering all rollovers in the definition, as the 2016 rule would have done,” she writes. “Similarly, saying that firms may need to do more than stick a disclaimer in six-point type in a disclosure document to avoid any fiduciary obligations is appropriate, as far as it goes, but it would still appear to leave firms plenty of room to come up with a way to avoid those obligations, even in circumstances when the retirement saver will rely on those recommendations as a primary basis for their investment decision.”
Beyond matters focused on Reg BI and the fiduciary duty of investment advisers, Roper might also contribute to the SEC’s revisiting of proxy voting rule changes made under the prior administration. Other potential focus areas, as denoted by the SEC’s 2021 examination priorities list, include financial services industry cybersecurity, operational resiliency, and the ongoing proliferation and development of financial technology innovations, including digital assets.
