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May 06, 2010 at 08:00 PM
they O’Neill Raises Fiduciary Standard for Officials; Ponders Greece
Blaine Aikin, CEO of fi360 introduced the former Treasury Secretary to a record crowd of 450 attending the conference this year. Aikin remarked that the environment is ripe for nurturing the fiduciary discussion as he thanked the SEC for the Goldman Sachs suit, adding that this–along with the Senate hearings and Goldman Sachs representatives’ testimony “give momentum to the discussion,” of fiduciary duty. Indeed, the fiduciary issue is heating up to a rolling boil.
This week, Senator Arlen Specter (D-Pennsylvania), filed two amendments to the Senate’s financial services reforms bill. Cosponsored by Senator Ted Kaufman (D-Del.), one of the amendments “imposes a fiduciary duty on all registered broker-dealers, and their agents and employees, who provide investment advice regarding a purchase or sale of a security or a security-based swap. The fiduciary standard, in legal terms, requires one to act in the best interests of the investor and to disclose specific facts relating to a conflict of interest.” Specter’s Web site notes that, “this amendment’s higher standard of care is not limited to only those broker-dealers that provide services to retail customers but includes all investors,” meaning that it’s intended to cover retail and institutional investors.
In a late-breaking related development, Sen Akaka will file an amendment tonight, May 6 on the same pro-fiduciary topic. See “Sen. Akaka to File Fiduciary Duty Amendment to Financial Reforms Bill.”
Aikin introduced Knut A. Rostad, regulatory and chief compliance officer of registered investment advisor Rembert Pendleton Jackson, and chairman of The Committee for the Fiduciary Standard, who spoke of the importance of extending the fiduciary standard of the Investment Advisers Act of 1940 to all who provide advice to investors. The committee was actually borne of discussions that took place at last year’s fi360 National Conference.
Rostad told of an extraordinary Friday meeting that members of the committee were invited to with a senior staffer for Sen. Tim Johnson (D-South Dakota). It was just before Johnson was to introduce an amendment to the Senate financial reforms bill–to substitute a study of whether investors’ interests should be put first by brokers–for the requirement of the fiduciary standard for all who provide advice to investors. The aide asked whether there were questions in the proposed study that had already been answered. Rostad and members of the committee analyzed the proposed amendment and prepared a detailed six-page document that showed where there were already answers to the majority Johnson’s proposed questions. This editor, a member of the committee, was at that meeting and participated in preparation of the document for Sen. Johnson.
