By Tamar Frankel — The SEC, authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, should impose a fiduciary duty on all brokers (and similar financial professionals) who suggest specific securities to clients.
An Investment Adviser’s Fiduciary Duty
By Lorna A. Schnase — An investment adviser’s fiduciary duty derives primarily from common law and federal statutory law. There are two basic duties, those of care and loyalty. Some authorities list additional duties such as a duty of obedience, a duty to act in good faith, and a duty of disclosure.
Dodd-Frank Act, Section 913: Study and Rulemaking Regarding Obligations of Brokers, Dealers, and Investment Advisers
Rulemaking – The Commission may commence a rule-making, as necessary or appropriate in the public interest and for the protection of retail customers, to address the legal or regulatory standards of care for brokers, dealers, investment advisers, persons associated with brokers or dealers, and persons associated with investment advisers for providing personalized investment advice about securities to retail customers.
Testimony of Arthur Levitt, Jr. Senate Banking Committee
Turmoil in the U.S. Credit Markets: The Genesis of the Current Economic Crisis
Testimony of Arthur Levitt, Jr. Senate Banking Committee
Former Chairman Levitt testifies to the Senate in 2008 that the SEC can build market trust. His counsel is more pertinent today.
New SEC Rule helps investors sort out brokers from investment advisers, requires a brokerage account disclosure, “Our interests may not be the same as yours”
Many people have asked about the origins of the “Butcher versus Dietitian” white board video recently popularized by Hightower Advisors and Tony Robbins. Its an excellent video, no doubt. Full disclosure, the first rendition of this story line to explain the differences between a broker and investment adviser in recent times (that I am aware of) was actually ten years ago when Harold Evensky and I collaborated on the idea in a different format and medium. Click the link above to see the PSA and news release. Knut
