(Bloomberg) -- With the ink barely dry on new federal rules governing broker conflicts, the industry is moving to quash stricter regulations that are now popping up at the state level.
One initial battleground is New Jersey, where a group of 11 financial trade associations Friday plan to ask the state’s securities regulator to reconsider its conduct proposal in light of action by the Securities and Exchange Commission last week. The SEC measure, requiring brokers to act in the “best interest’’ of clients, was derided as a Wall Street giveaway by consumer advocates.
Read More: The Battle Over Broker Rules Goes Local as Washington Retreats
“The creation of overlapping, duplicative or potentially conflicting requirements could create serious issues for the industry’’ and would “likely lead to increased investor confusion and undermine the intent of federal law,” the trade groups wrote in a letter.
The trade associations signing the letter include the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the American Securities Association.
The fight over setting a code of conduct for brokers has been going on in Washington for more than a decade. The SEC’s regulation, approved on a 3-1 vote on June 5, impacts tens of millions of investors who buy stocks and bonds as they save for retirement, new homes and college.
Still, much remains unsettled. While the SEC regulation was widely lauded by brokers, pro-investor groups and Democratic politicians said it wouldn’t increase protections and, in fact, would allow some shady industry practices to continue. Many of the opponents are now urging states to do their own, stricter rules.
Read More: In Whose Interest Is SEC ‘Best Interest’ Rule?
Along with New Jersey, Nevada is also considering imposing its own requirement on brokers and other states are expected to jump in. Those proposals would generally impose a tougher code of conduct, known as a fiduciary duty.
In their letter Friday, the industry groups also argued that the New Jersey plan conflicts with federal law -- a reminder that whatever the outcome, the issue is likely to wind up being challenged in court.
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