These are just a few theories as to why thenormally vocal financial industry is silent regarding the SEC's RegBI. (Photo: Shutterstock)

What's worse: The SEC's Regulation Best Interest or 3.6Roentgen? After this past week, we may just have to wait to see theextent of the fallout from the courtroom.

A funny thing happened as I was researching the Reg BI story(see "How Reg BI Changes the Fiduciary Landscape for the401k Plan Sponsor," FiduciaryNews.com, September 10, 2019).Nobody was talking.

This was quite different than what happened when the DOL cameout with its now vacated "Conflict-of-Interest" (aka "Fiduciary")Rule in 2016. Back then, everybody was talking. And talking andtalking.

Both sides couldn't stop talking enough. Fiduciary advocates,for the most part, saw it as a step forward (though a few puristssaw it as a capitulation). Opponents of the Rule made their voicesvery well heard, initially through threats of lawsuits and finallywith the lawsuits themselves.

With the SEC's Reg BI, it was all crickets. Sure, you had yourinitial superficial reactions, but, after that, it was the Cone ofSilence. Even my usual high-placed and highly regarded sources heldback. It was either "I don't want to go on the record" or "Ourcompliance department is still sifting through the wording."

Most noticeable, however, was the lack of coordinated vocalopposition from those who successfully challenged the DOL's attemptat a universal fiduciary rule (at least as applied to theretirement market).

Why do you think normally vociferous industry leaders suddenlyinvoked omertà?

Naturally, I can offer a few theories. (I mean, really, did youexpect any other reason for me to ask the question?)

First, there was a genuine concern that the initialinterpretation of Reg BI was incorrect. In fact, the SEC did haveto clarify things like whether registered investment advisers couldstill refer to themselves as fiduciaries. (After initial reportsindicated "no," later reports said "yes.") Then there was the whole"does this apply only to brokers?" question. (The answer is,although the regulation is designed to address concerns withbrokers, it appears RIAs also have new compliancerequirements.)

So, mistaken thoughts made early on in the process may have madesome people gun-shy to say more.

That's understandable.

But I don't think that's the real reason for the unusualsilence.

Let's go back to the original legend behind omertà. It's athreat. It means you either keep your mouth shut or we'll shut itfor you – in a permanent way.

How could the SEC engender that level of fear where the DOLhasn't?

It's simple. The DOL's regulatory reach is very narrow. Unlikethe SEC, the DOL rarely finds itself in a position to randomly testan investment provider. (Plan sponsors, on the other hand, the DOLcan randomly test to their hearts' content.)

The SEC can come through your door like a hot knife throughbutter. You can't stop them. And if you try, well, then, you musthave something to hide. Nope. The culture of the business is to beas kind as possible to the SEC, for they have the power to end your(business) life.

As a result, he who speaks ill of the SEC had best havedeep pockets or off-shore accounts. And even then, you're rollingthe dice.

This may be why even the fiduciary purists are relatively silentwhen it comes to Reg BI.

It is the third reason for silence that is most disconcerting.The silence of the opponents to the original DOL Rule.

Why might they be silent? Well, if you don't have a reason tocomplain, you don't have a reason to talk.

And that possibility has me very worried, as it should everyinvestor.