WASHINGTON BUREAU — Sen. Robert Menendez has been on the Senate floor trying to round up support for the idea of imposing a fiduciary standard of care on all sellers of retail investment products.

Insurance policy experts are expecting Menendez, D-N.J., to offer a fiduciary standard amendment that would modify S. 3217, the Restoring Financial Stability Act, sometime this evening. The amendment, cosponsored by Sen. Daniel Akaka, D-Hawaii, would put the original version of Section 913 back in of S. 3217.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, included the Section 913 fiduciary standard provision in a draft of the financial services bill unveiled in November 2009.

When the committee approved the bill in March, it replaced Section 913 with a provision that calls for the U.S. Securities and Exchange Commission to study the obligations of brokers, dealers and investment advisors to retail customers, then report back to Congress within 18 months.

The Menendez-Akaka amendment would give the SEC the authority to impose new rules dealing with the issue based on its findings.

The language now in the bill would let the SEC impose new rules only if the rules addressed “regulatory gaps and overlaps in existing rules.”

A fiduciary standard requires a seller to place the interests of the customer first.

Current rules apply a fiduciary standard to investment advisors and apply a suitability standard to broker-dealers.

A suitability standard requires only that a seller of securities verify that the products sold to an individual suit the needs of that individual.

Many insurance producer groups have argued that the fiduciary standard provision now in S. 3217 would be difficult or impossible for life insurance agents who sell securities to meet, because many agents have contracts that permit them to sell products written only by one company, or by a small group of companies.

Menendez talked on the Senate floor Wednesday about the recent civil fraud suit that the SEC brought against Goldman Sachs Group Inc., New York.

“All brokers currently have exactly the same conflict of interest that Goldman Sachs had,” Menendez said. “Financial incentives to steer clients toward bad investment products that brokers made more money on.”

Today, “retail investors are confused,” Menendez said. “They commonly think the services that investment advisers and brokers provide are nearly identical.”

RAND, Santa Monica, Calif., has published a study describing that confusion, Menendez said.

“So, I don’t think we need further studies,” Menendez said.

The Menendez-Akaka amendment “would end the confusion,” Menendez said. “It would require brokers to act in the best interests of their clients, just as investment advisers already do. It requires brokers to disclose conflicts of interest, so brokers would have to tell retail clients if they get more fees for selling a particular mutual fund or annuity product.”

The amendment would give the Federal Trade Commission the discretion to apply a fiduciary duty standard for all types of investors, which would include institutional investors who are victimized by the kinds of allegations involved in the Goldman Sachs case, Menendez said.

Jill Edwards, a lobbyist for the National Association of Insurance and Financial Advisors, Falls Church, Va., says she disagrees with the Menendez assertion that the need for a fiduciary standard has already “been studied.”

The RAND report did not study the fiduciary standard issue, Edwards says.

“It simply reported consumers are confused,” Edwards says.

Section 913 in the original Dodd bill “goes beyond the scope of the RAND study and does evaluate the regulatory environment for gaps or overlaps that are found harmful to investors,” Edwards says. “And then it does require the SEC to take action based on the findings.”

Legal experts and academics who testified at a recent congressional hearing pointed out that the term “fiduciary” is hard to define, Edwards says.