WASHINGTON BUREAU — The U.S. Securities and Exchange Commission should study investment advisors and broker-dealers carefully before trying to revamp fiduciary responsibility rules, according to American College President Laurence Barton.
Barton makes the case in a letter sent Monday to members of the Senate Banking Committee.
The committee is considering the Restoring American Financial Stability Act of 2009 bill draft, which was developed by Sen. Christopher Dodd, D-Conn., the committee’s chairman.
Barton urges lawmakers to replace the current language in Section 913 of the current version of the draft with language requiring a “full SEC report” that would provide clear legislative recommendations, “along with a detailed picture of the consequences of various courses of action.”
Trying to “harmonize” the obligations of advisors and broker-dealers without understanding the differences between their roles would be a mistake, Barton writes.
“Your approach in [Section] 913 of eliminating the exclusion for brokers and dealers from the Investment Advisers Act of 1940 may seem simple, but by adopting it, you fall into the same trap that the House Financial Services Committee narrowly averted,” Barton writes.
“It’s one thing to harmonize standards at a fiduciary level when brokers, dealers and investment advisers are providing the identical service of offering advice for a fee about securities,” Barton writes.