{"id":1733,"date":"2013-03-04T08:59:03","date_gmt":"2013-03-04T13:59:03","guid":{"rendered":"http:\/\/centerforfinancialstability.org\/wp\/?p=1733"},"modified":"2013-03-04T09:07:46","modified_gmt":"2013-03-04T14:07:46","slug":"sec-survey-on-obligations-of-broker-dealers-and-investment-advisers-to-retail-customers","status":"publish","type":"post","link":"https:\/\/centerforfinancialstability.org\/wp\/2013\/03\/04\/sec-survey-on-obligations-of-broker-dealers-and-investment-advisers-to-retail-customers\/","title":{"rendered":"SEC Survey on Obligations of Broker-Dealers and Investment Advisers to Retail Customers"},"content":{"rendered":"

The SEC published a request for data and other information to assist it in determining whether to make new rules as to the standards of conduct and regulatory obligations for broker-dealers and investment advisers when they provide personalized investment advice about securities to retail customers, e.g., should broker-dealers be under a fiduciary obligation in providing advice to retail customers.<\/p>\n

Among the specific topics as to which the SEC has requested information are the following:<\/p>\n

    \n
  1. Types of retail customers who use broker-dealers for advice vs. those who use investment advisers.<\/li>\n

    <\/span><\/p>\n

  2. Types of services and information and types of service providers available to retail customers.<\/li>\n

    <\/span><\/p>\n

  3. Costs of providing services to retail customers, particularly personalized services.<\/li>\n

    <\/span><\/p>\n

  4. Information regarding principal transactions with customers and other conflicts of interests with customers.<\/li>\n

    <\/span><\/p>\n

  5. Profitability of doing business with retail customers.<\/li>\n

    <\/span><\/p>\n

  6. Ability of customers to sue a broker-dealer or investment adviser.<\/li>\n

    <\/span><\/p>\n

  7. Information as to disclosures provided to customers.<\/li>\n<\/ol>\n

     Lofchie Comment: <\/span> The questions the SEC asked in the survey seem fair, genuinely intended to elicit as much information as possible on an important issue (as opposed to questions directed towards a simplistic finding that broker-dealers should have a fiduciary duty any time that they make a recommendation to a customer).<\/p>\n

    The really important question is not so much whether broker-dealers should owe a fiduciary duty to customers, but rather what services can be made reasonably available to retail customers in a way that those customers understand the level of service being provided.  If we end up with a legal standard where it is effectively illegal to provide any advice to a retail customer other than as part of a full-blown, full service investment advisory relationship, then many customers will simply be priced out of obtaining any personalized service. (Perhaps that is a good result, if one believes that the advice that customers receive is inherently and systematically flawed.  However, the regulators should not pretend that the level of attention available to a customer with a $50,000 portfolio can be made the same – by operation of law – as that available to a customer with a $10 million portfolio.)<\/p>\n

    View Press Release in full here<\/a> (links externally to SEC website).
    View:      SEC Request for Data on the Duties of Broker-Dealers and Investment Advisers
    <\/a>See also:     Investor and Industry Perspective on Broker-Dealers and Investment Advisers (2006)
    <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

    The SEC published a request for data and other information to assist it in determining whether to make new rules as to the standards of conduct and regulatory obligations for broker-dealers and investment advisers when they provide personalized investment advice … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-1733","post","type-post","status-publish","format-standard","hentry","category-reg"],"_links":{"self":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts\/1733","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/comments?post=1733"}],"version-history":[{"count":2,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts\/1733\/revisions"}],"predecessor-version":[{"id":1735,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/posts\/1733\/revisions\/1735"}],"wp:attachment":[{"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/media?parent=1733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/categories?post=1733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/centerforfinancialstability.org\/wp\/wp-json\/wp\/v2\/tags?post=1733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}