"Broker-Dealers and Investment Advisers Should be Subject to the Same Fiduciary Standard of Conduct and Heightened Regulatory Regime When Providing the Same or Substantially Similar Services. Another area where regulation should be rationalized involves broker-dealers and investment advisers, particularly with respect to the services they provide to retail investors. The Commission has been closely examining the broker-dealer and investment adviser regulatory regimes and assessing how they can best be harmonized and improved for the benefit of investors. Many investors do not recognize the differences in standards of conduct or the regulatory requirements applicable to broker-dealers and investment advisers. When investors receive similar services from similar financial service providers, it is critical that the service providers be subject to a uniform fiduciary standard of conduct that is at least as strong as exists under the Investment Advisers Act, and equivalent regulatory requirements, regardless of the label attached to the service providers," Schapiro told the Committee.
Referring to the hearings during the Great Depression that led to the Wall Street and banking reforms of that era, Schapiro drew a comparison between the FCIC's work and that investigation of the crash in 1929: "Ferdinand Pecora uncovered widespread fraud and abuse on Wall Street, including self-dealing and market manipulation among investment banks and their securities affiliates." See all FCIC testimony, here.
In her testimony, the Chairman outlined several initiatives that will enable the SEC to strengthen enforcement, addressed supervision of "Complex Financial Institutions," broker/dealer capital and reporting concerns, transparency, compensation and regulation of markets. She also addressed, once again, the need for more resources for the SEC, something that Barney Frank has recognized in proposed financial services reforms legislation. The SEC takes in much more in revenue than Congress has appropriated for it in recent years. (See related articles, below.)
Comments? Please send them to firstname.lastname@example.org. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.
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