Fiduciary Duties

New York City comptroller Scott M. Stringer is pushing the state legislature to pass a law that would clarify the distinction between brokers and investment advisers to investors. Stringer's proposal would mandate that all financial advisers directly state whether they must act in their clients' best interests. “We need a uniform, national fiduciary standard, but we can't wait to give New Yorkers the common sense reforms they need to make informed investment choices,” Mr. Stringer stated. “This new law will ensure that New Yorkers know whether the investment advice they receive is in their best interest.” Currently, investment advisers must operate under a fiduciary standard, but brokers must only recommend products that are suitable to the investor. Stringer's proposal would mandate the following disclosure orally and in writing at the outset of a financial relationship, at frequent intervals, and in advertising: "I am not a fiduciary. Therefore, I am not required to act in your best interests, and am allowed [...]

Mary Jo White, Chairwoman of the SEC, told legislators that the agency will continue at its own pace, over an extended period of time, to address raising investment advice standards for brokers. The agency will not be rushed by a similar Department of Labor rule currently pending. White stated before the House Financial Services Committee that the SEC and DOL are discussing the issue together but are working separately as different agencies with different jurisdictions and mandates. White warned not to expect change any time soon: “We really are at the beginning of this process. I've reached my own personal conclusion. But the next step is for me to be discussing in detail all the aspects of my thinking with my fellow commissioners. It's a long process, with lots of complex issues.” She noted that despite her support of a fiduciary-duty rule for brokers, she still needs support from at minimum two other members of the five-person commission to pass [...]

SEC Chair Mary Jo White stated that the agency will create stricter rules for broker. By doing so, the SEC will enter a long-standing war between Wall Street and the White House, which has asserted that biased financial advice is costing investors millions of dollars. White's comments follow on the heels of a move by the Labor Department to make brokers put the interests of retirement savers ahead of their own, which is called a fiduciary duty. The SEC has studied the issue for years but has yet to take any regulatory action. White believes that the SEC should “implement a uniform fiduciary duty for broker-dealers and investment advisers where the standard is to act in the best interest of the investor.” The financial industry has been watching closely for Ms. White's position, which would break a standoff between the two Democrat and two Republican commissioners. White said she will begin talking with the other commissioners about the outlines of [...]