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SEC Pushing for Uniform Fiduciary Duty Standard for Brokers and Investment Advisors

SEC Pushing for Uniform Fiduciary Duty Standard for Brokers and Investment Advisors

The agency chair of the Securities and Exchange Commission (SEC), on Tuesday, pushed for an adoption of uniform fiduciary standards for broker-dealers and investment advisers. The fiduciary standard has long been applied to registered investment advisors but only recently has there been a movement to Appleby the same standards to brokers (putting client interests ahead of their own when recommending retirement investments).

Chair Mary Joe White, while speaking at a Securities Industry and Financial Markets Association (SIFMA) convention, said SEC staff members have provided “extensive assistance” to the Department of Labor (DOL), but that the two agencies are very different and should each have their own rules. 

The new SEC rule would be implemented under the Dodd-Frank Act, which directed the SEC to study the need for establishing a uniform, federal fiduciary standard for brokers and investment advisers and authorized the SEC to establish a rule if it saw fit. 

Should the rule be adopted, it would be a significant change and one that would help clients of brokerage firms.  Under the current system, while Brokers advertise like they have a fiduciary obligation to put their client’s interests first, when something goes wrong, they often deny they have a fiduciary obligation and claim they only have to execute trades in a timely and reasonable fashion.  Thankfully, this new rule would bring both investment advisors and stock brokers under the same heightened obligation umbrella. White did note that setting up uniform standards and implementation would be a challenge but feels its the proper thing to do.

The experienced securities fraud attorneys at Colling Gilbert Wright have successfully litigated and resolved hundreds of arbitration claims based on breaches of fiduciary duty. If you feel you have lost money due to a broke putting his or her interest ahead of yours, please contact our offices today for a free case evaluation.



She noted, however, that there would be “complexities and challenges” in implementing such a rule, including how to define the standard, offer clear guidance on the standard’s requirements, and provide meaningful examinations and enforcement of that standard.

“In terms of how you define it, my view is that it should be a codified, principles-based standard rooted in the current fiduciary duty standard of investment advisers and should be no lower than that,” she said.