Democratic senators Elizabeth Warren (D-Mass.), Cory Booker (D-N.J.) and Sherrod Brown (D-Ohio) have sent a letter to the Financial Industry Regulatory Authority requesting that it provide its interpretation of the Securities and Exchange Commission's proposed standards of conduct rule.

In their letter to FINRA President and Chief Executive Officer Robert Cook, the legislators expressed concern that the rule, which FINRA will play a large role in implementing and enforcing, would not adequately protect investors or guarantee that brokers put their clients' interests ahead of their own.

The SEC's rulemaking package, which it released in April to address the standards of conduct for investment professionals, is now open for public comment.  FINRA, the primary regulator of the brokerage industry, will be largely responsible for implementing the rule both through its arbitration forum and its own disciplinary actions against broker-dealers.

In their letter, the Senators criticized the proposal's ambiguous "Best Interest" standard and raised concerns about its ability to adequately address harmful conflicts of interest in the brokerage industry. "Despite its title implying a much more stringent standard, this proposal is unlikely, for several reasons, to give investors the peace of mind they deserve that the advice they are receiving is truly in their best interests," they wrote, pointing out that the SEC Commissioners “have developed remarkably different interpretations of what exactly the rule would require with regards to brokers' potential conflicts of interest.”

The letter noted the importance of FINRA's interpretation of the proposal in understanding its potential impact. “Whether or not it will fulfill the SEC's stated goal of raising the standard of conduct for broker-dealers may depend largely, if not almost entirely, on the way that FINRA interprets the rule and applies it in its disciplinary actions and arbitration proceedings," the letter stated. “In other words, billions of dollars in middle-class Americans' hard-earned savings-which families need to buy a house, send a child to college, or retire in old age-may depend on how you understand and implement the SEC's rule.”

The senators asked a series of questions related to FINRA's interpretation of the proposal before the end of the proposal's public comment period on Aug. 7, 2018. The letter follows earlier statements outlining concerns that the proposal would do little to eliminate conflicts of interest and protect working families from conflicted investment advice.