SEC Unprepared to Implement the Fiduciary Standard for Broker-Dealers
Posted by William Byrnes on March 28, 2011
Broker-dealers will be subject to a fiduciary standard of care no earlier than the second half of 2012, predicts Richard Ketchum, Chairman and CEO of the Financial Industry Regulatory Authority (“FINRA”). Mr. Ketchum’s remarks come a week after SEC chairman Mary Schapiro said that the SEC has “a lot of work to do” before putting “pen to paper” and writing the fiduciary standard rules.
Causes of the delay were hinted at by a pair of reports issued by the SEC last month, one of which concluded that broker-dealers and registered investment advisers (“RIA”) should be subject to the same fiduciary standard of care. The other report provided recommendations for improving the examination of investment advisors, concluding that a Self-Regulatory Organization (“SRO”) should be appointed to conduct examinations of investment advisors. An SRO is a private organization that is granted some regulatory authority over a particular industry. SROs are typically funded by member user fees. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
For previous coverage of the fiduciary standard in Advisor’s Journal, see SEC Fiduciary Standard Study Answers Few Questions (CC 11-25), Study Finds that Universal Fiduciary Standard Will Hurt Investors (CC 10-97) and What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10 40)
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This entry was posted on March 28, 2011 at 05:56 and is filed under Compliance. Tagged: Broker-dealer, Dodd–Frank Wall Street Reform and Consumer Protection Act, Fiduciary, Financial Industry Regulatory Authority, Mary Schapiro, Self-Regulatory Organization, Standard of care, U.S. Securities and Exchange Commission. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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