Today, BDA submitted a comment letter to the Labor Department (DOL) regarding its request for comment on a proposal to expand the definition of ‘fiduciary’ under Employee Retirement Income Security Act (ERISA). As proposed, the expansion would significantly limit the ability of dealers to provide investment advice and recommendations to retirement investors. BDA’s letter focuses on…
Category: Fiduciary Duty
The DOL’s rule applies a fiduciary duty to those providing investment advice to retirement investors. BDA advocated in comment letters and in testimony, for common sense changes to the rule and for the DOL and the SEC to coordinate their efforts. The SEC has stated it intends to publish a proposed rule applicable to the standards of care provided by broker-dealers and investment advisers at a later date.
Fiduciary Duty Concept Release by Summer 2012
Speaking at the Investment Management Consultants Association, former head of SEC’s Investment Management, Buddy Donohue says that it’s possible the industry sees a concept release later this year, but not the proposed rule. As reported, Donohue indicated an actual rule proposal on a fiduciary standard for brokers is unlikely to occur this year, but we…
Chairman Schapiro responds to Congressman Garrett's letter: addresses Investor Protection & Fiduciary Standard Initiatives.
On December 21, 2011, Congressman Scott Garrett, Chairman of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, sent a letter to SEC Chairman Mary Schapiro expressing disappointment in the “SEC staff’s recommendation to impose a uniform fiduciary duty on broker-dealers and investment advisors” as authorized under Section 913 of the Dodd-Frank…
DOL Pulls Fiduciary Rule
Just last week, the former chairman of the House Financial Service Committee, Rep. Barney Frank (D-MA), wrote to Labor Secretary Hilda Solis urging her to do so. The Labor Department announcement is available here and Congressman Frank’s letter is available here. The proposal would have updated a 1975 regulation on who is a fiduciary to…
BDA Opposes Fiduciary Duty Before House Financial Services
The BDA opposes a broker-dealer fiduciary duty because no benefit to investors has been shown, because the current rules protect investors and because a fiduciary relationship is not possible when the broker-dealer has been engaged by an investor to buy or sell securities from that investor. Further, the risk of litigation that a fiduciary duty…
MSRB files proposed Rule G-36 with the SEC, governing the fiduciary duty owed by municipal advisors.
Today, the MSRB filed proposed Rule G-36 with the SEC, governing the fiduciary duty owed by municipal advisors to state and local government clients, and other municipal entity clients. Under the Rule and its accompanying guidance, municipal advisors would owe a duty of loyalty and a duty of care that would require them to act…
Rule G-23 Finalized
There are several exceptions to the general prohibition, including for advice provided by an underwriter. The SEC also approved an interpretive guidance on when a firm would be considered to be an underwriter and not a financial advisor. The BDA has prepared suggested language for firms to use to be considered an underwriter and we…
BDA Comments on Proposed Changes to Rule G-23
The BDA urged the SEC to delay the implementation of changes to Rule G-23 until the new fiduciary duty of municipal advisors is more clearly delineated, because that may eliminate the need for any changes to Rule G-23. If changes to G-23 do move forward, the BDA urged the SEC to allow financial advisors to…
Two Commissioners Criticize SEC Fiduciary Study
Commissioners Casey and Paredes have issued a statement that criticizes the SEC Staff study on a uniform fiduciary duty for Investment Advisers and broker-dealers for not providing an “adequate articulation or substantiation of the problems that would purportedly be addressed via that regulation. The Study also does not adequately recognize the risk that its recommendations…
SEC Releases Study on Fiduciary Duty
The Study, required under the Dodd-Frank Act before the SEC can issue regulations, does not provide recommendations of specific actions for the SEC to take, other than to impose a broad uniform standard of care for Investment Advisers and Broker-Dealers. The Study also does not recommend prohibiting specific possible conflicts of interest, seeming to rely…