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June 24, 2010 at 08:00 PM
Senate conferees on Thursday, June 24, accepted the House counteroffer on fiduciary duty. Under the final agreed upon language, the SEC will have six months to conduct a study of advisor and broker obligations toward retail customers and once the study is completed the SEC is given the rulemaking authority to put brokers under the same fiduciary standard of care that applies to investment advisors.
“This is a huge victory for investors,” says Knut Rostad, chairman of The Committee for the Fiduciary Standard and the Regulatory and Compliance Officer at Rembert Pendleton Jackson Investment Advisors in Falls Church, Virginia. Under the House-Senate compromise, “the [SEC] study is shortened to six months, the SEC has the authority to commence rulemaking [on a fiduciary standard], and the rulemaking must provide a standard consistent with the Adviser’s Act” of 1940. “Those three aspects alone,” Rostad says, “culminate in a huge victory” for investors.
David Tittsworth, executive director of the Investment Adviser Association (IAA) in Washington, says the agreement “marries major parts of both the House and Senate bills. The conferees essentially stapled major parts of the Senate study to major parts of the House rulemaking provisions.”
The agreement, he continued, “includes many of the Senate provisions requiring the SEC to conduct a study of broker/dealer and investment advisor regulation (changing it to a six-month study instead of one year). It also includes many of the House provisions authorizing the SEC to issue rules that would impose the Advisers Act fiduciary duty on brokers who provide personalized investment advice to retail customers (changing ‘shall’ to ‘may’).”
