In a move that has the potential to positively affect the retirement and financial lives of most Americans, the House Financial Services Committee approved the Investor Protection Act, H.R. 3817 by a vote of 41-28. The bill is part of the sweeping reforms first proposed in the Obama administration's June 17 white paper on the re-regulation of financial services.
Rep. Paul E. Kanjorski (D-PA), Chairman of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, introduced the bill in response to the financial crisis. The Investor Protection Act (IPA), proposes to strengthen the power of the SEC in scope and funding, "doubling the authorized funding for the SEC over 5 years and providing dozens of new enforcement powers and regulatory authorities," and identifying reforms necessary to enable agencies to detect frauds such as Madoff and Stanford.
In addition, the IPA mandates that "Every financial intermediary who provides advice will have a fiduciary duty toward their customers. Through a harmonized standard, broker-dealers and investment advisers will have to put customers' interests first."
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Comments? Please send them to email@example.com. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.