One week ago today, the SEC released a study which recommends a uniform fiduciary standard of conduct for broker-dealers and investment advisers. According to the SEC, “many investors are…confused by the different standards of care that apply to investment advisers and broker-dealers.” The SEC added, “the regulatory regime that governs the provision of investment advice to retail investors is essential to assuring the integrity of that advice and to matching legal obligations with expectations and needs of investors…Retail customers should be protected uniformly when receiving personalized investment advice about securities regardless of whether they choose to work with an investment adviser or a broker-dealer.” As a result, the study “recommends that the Commission…adopt and implement, with appropriate guidance, the uniform fiduciary standard of conduct for broker-dealers and investment advisers when providing personalized investment advice about securities to retail customers.” The standard, according to the study, should be “no less stringent than currently applied to investment advisers under [the] Advisers Act.”
According to Lawrence L. Klayman of Klayman & Toskes, “We applaud the SEC in its efforts to reform the securities industry and believe that rules and regulations which establish a fiduciary duty on the part of the retail broker is an important step towards achieving lasting reform. This uniform standard has been a long time coming. A codification of this fiduciary duty for brokers is reflective of today’s brokerage environment and what the securities industry has evolved into over the last 20 years. From a marketing perspective, broker-dealers promote themselves as being trusted advisers. That is what investors expect to receive. The formal imposition of a fiduciary standard on these brokers will merge their representations with their legal responsibilities.”
“In my opinion, this levels the playing field in securities arbitration,” said Mr. Klayman. “We have always argued on behalf of investors that broker-dealers owe them a fiduciary duty. Formalizing a fiduciary standard on brokers means retail clients will have an easier time proving liability. Broker-dealers will no longer be able to argue that they had no ongoing duty of care to properly service the account, nor can they continue to argue that they are just order takers, when in reality the broker-customer relationship at full-service brokerage firms is advisory in nature. Brokers will no longer be able to side-step their fiduciary obligations based on a technicality. A uniform fiduciary standard will remove this defense.”
The attorneys at Klayman & Toskes are dedicated to pursuing claims on behalf of investors who have suffered investment losses. Klayman & Toskes, an experienced, qualified, and nationally recognized securities litigation law firm, practices exclusively in the field of securities arbitration and litigation. It continues its representation of investors throughout the world in securities arbitration and litigation matters against major Wall Street brokerage firms.