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Regulatory Wire: Advisor groups long have pushed for the fiduciary standard; because of the Goldman Sachs case, they may get what they asked for, and more

Senators call for ERISA-level standards of care for retail investors; also, Schapiro puts new ADV part 2 back on the radar

Author Sara Hansard May 7, 2010 at 6:06 AM
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Arlen Specter: I have long believed that it is insufficient to have fines for fraud. For corporate fraud, you have a fine and it is calculated as part of doing business.

Mark Kennedy

Mark Kennedy

May 7, 2010 — 10:15 AM

Great article…all very positive developments (including jail time proposal which likely won’t pass, but healthy to include as part of the dialogue)...ironic that the Goldman Sachs legacy may well result in adoption of broad based fiduciary standards…leading to margin/multiple compression for Wall Street firms, lower bonuses etc…all as it should be….as the naked, finger pointing Rahm Emanuel likes to say “never waste a good crises”...

Stephen Winks

Stephen Winks

May 7, 2010 — 2:23 PM

Congress is listening and the best interests of the investing public are finally surfacing in a very public way. The brokerage industry can stonewall but for so long after 70 years of stonewalling. At some point the industry must align itself with the best interests of the consumer and do the right thing in supporting its brokers. Brokers have always wanted to act in the best interest of their clients, but they are at the mercy of the support their brokerage firm provides. It is a violation of internal compliance protocol for brokers to acknowledge they render advice, acknowledge fiduciary standing or acknowledge their fiduciary obligation to act in the consumer’s best interest. This can not stand.

It is imperative for Consumer Protection and the restoration of the faith and confidence of the investing public, that Congress provide the SEC with the legislative authority to establish, regulate and enforce the fiduciary standing of brokers, based on non-negotiable objective criteria of statute, case law and regulatory opinion letters which have formulated a common understanding of fiduciary duty.


Rick Johnson

Rick Johnson

May 10, 2010 — 2:30 PM

I wish Chairman Shapiro would quit saying that registered representatives and investment adviser representatives provide the same services to the retail customer. This is not true at all. IAR’s do not sell A-Share mutual funds, Variable Annuities and Highly Illiquid REIT’s, all of which pay the registered representative high commissions that help them meet their $250,000 a year revenue quota. IAR’s do not have revenue quotas and do not sell conflicted investments to clients. The revenue quotas required by Wall Street firms is why you will never see a true fiduciary standard of care.

As long as the revenue quotas remain in place, then there is no possibility of a fiduciary standard of care. This is an indisputable fact. It makes absolutely no difference if a registered representative is also an IAR. They still have to produce that $250,000 in revenue to keep their job which means their loyalty is to the firm first, themselves second and the client third. This does not meet the definition of a fiduciary standard of care. Period, point blank, end of story.

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