Subcommitee Recommends SEC Rules Imposing Fiduciary And Disclosure Duties On Brokers

Recently, the Securities and Exchange Commission posted two recommendations by the Investor as Purchaser Subcommittee of the Investor Advisory Committee.  In general, the Subcommittee recommended:

  • The SEC should conduct a rulemaking to impose a fiduciary duty on broker-dealers when they provide personalized investment advice to retail investors; and
  • As part of its rulemaking, the SEC should adopt a uniform, plain English disclosure document to be provided to customers and potential customers of broker-dealers and investment advisers that covers basic information about the nature of services offered, fees and compensation, conflicts of interest, and disciplinary record.

I found the posting to be somewhat Delphic as they simply appeared under the caption “October 10, 2013? without any further explanation.  This suggested that the recommendations were to be considered on that date, but who knows?  A further mystery was who was on the Subcommittee.  I’ve learned that the Subcommittee is comprised of James Glassman, Craig Goettsch, Joseph Grundfest, Jean Setsfand and Steven Wallman.

This may seem as old news to those readers who recall that Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ordered the SEC to conduct a study to evaluate:

  • The effectiveness of existing legal or regulatory standards of care (imposed by the SEC, a national securities association, and other federal or state authorities) for providing personalized investment advice and recommendations about securities to retail customers; and
  • Whether there are legal or regulatory gaps, shortcomings, or overlaps in legal or regulatory standards in the protection of retail customers relating to the standards of care for providing personalized investment advice about securities to retail customers that should be addressed by rule or statute.

The SEC staff issued its study more than two years ago.

The SOS Has Not Been Singing The Body Electric

Over the weekend and on Monday, I tried to access the California Secretary of State’s website and received the following message:

Due to a local power failure at the Secretary of State’s office, all websites are uavailable until further notice.  We will resume services as soon as possible.

We are very sorry for the incovenience.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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