Setting the standard: Draft sets the bar for a broker, adviser fiduciary standard
Based on a draft amendment of the Investors Protection Act that was distributed today by the House Financial Services Committee to select members of the financial services industry, the duty of care applied to both brokers and financial advisers would be at least as high as the standards that the SEC applies to investment advisers.
Based on a draft amendment of the Investors Protection Act that was distributed today by the House Financial Services Committee to select members of the financial services industry, the duty of care applied to both brokers and financial advisers would be at least as high as the standards that the SEC applies to investment advisers.
The draft, which has not yet been made public, amends the Investor Protection Act issued by House Capital Markets Subcommittee Chairman Paul Kanjorski, D-Penn.
Under this amendment, the Securities and Exchange Commission would still be required to write the rules governing fiduciary standards that advisers and brokers — who give personal advice — would have to abide by. Adviser groups are wary of that, however, fearing the SEC would weaken standards to accommodate the brokerage industry.
“Although some ambiguity remains and we’d prefer not subjecting the fiduciary duty under the [Investment] Adviser Act [of 1940] to SEC rulemaking, the proposed Manager’s Amendment does add some good language,” Investment Adviser Association Vice President Neil Simon wrote in an e-mail.
The committee postponed a mark-up of the Investor Protection Act, legislation that would subject hedge funds to SEC registration, and legislation that would create a federal insurance office until Oct. 27. The bills originally had been slated to be marked up this week, but the delay was requested by Republican members, according to a press release issued by Committee Chairman Barney Frank, D-Mass.
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