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Sources Say Johnson Fiduciary Amendment to Be in Dodd's Financial Services Reform Bill

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Washington insiders say that Senator Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, plans to release a draft of his financial services reform bill on February 25, and that it will include Senator Tim Johnson’s (D-South Dakota) amendment which asks that the Securities and Exchange Commission (SEC) conduct a study “to determine appropriate obligations” of advisors and brokers, and then to issue a rule after such a study is completed.

The insiders say that Johnson’s amendment will replace the fiduciary language that was in Dodd’s original discussion draft of his bill; that original language would have required that brokers be held to the same fiduciary standard as investment advisors.

The financial planning community and some investor advocates have been fighting Johnson’s legislative amendment, while broker/dealers have generally been supportive of the amendment.