Candid conversation with John Taft of SIFMA on conduct standards.
The Specific Fiduciary Duties of Investment Advisers
Contrary to what some of the critical comments received by the DOL/EBSA suggest, fiduciary duties are neither too “ill-defined” nor “vague” to be applied to investment advisory activities. Such duties have been applied to other professionals for centuries. Additionally, there is a significant body of case law applying fiduciary duties of due care, loyalty, and good faith upon the activities of investment advisers (both at the federal and state level).
Rulemaking Re: Brokers, Dealer and Investment Advisers
On July 14, 2011 SIFMA submitted comments to the SEC on a proposed framework for establishing a uniform fiduciary standard of conduct for broker-dealers. SIFMA’s proposal departs from the fiduciary standard as set forth under the Advisers Act of 1940 and, if adopted, would be particularly harmful to retail investors.
Comments on Definition of Fiduciary Proposed Rule
Disclosures and client consent are insufficient – by themselves – to satisfy the fiduciary standard. Investors must be able to rely on and have confidence in the expertise of their advisor. This can only be accomplished by applying a standard that prohibits all conflicts of interest.
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
Former Chairman Levitt testifies to the Senate in 2008 that the SEC can build market trust. His counsel is more pertinent today.