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July 21, 2010 at 08:00 PM
As President Barack Obama on Wednesday, July 21, signed the most sweeping financial reforms law since the Great Depression, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Boston University Review of Banking & Financial Law and The Committee for the Fiduciary Standard announced a “call for papers” to address applying the fiduciary standard to brokers who provide advice to individual investors.
The Dodd-Frank bill requires a number of studies by regulators, including a six-month SEC study of whether brokers who provide advice to individual investors should have to put those investors’ interests ahead of their own. If the SEC concludes that it is necessary after the study, it can adopt rules mandating that brokers who provide advice to investors do so under the fiduciary standard, as investment advisors do, under the Investment Advisers Act of 1940.
The groups are calling for papers “from scholars, researchers, practitioners, and professionals for 1,250- to 4,000-word paper contributions to an issue slated for publication during the Fall of 2010. This issue focuses on the application of fiduciary duties to the delivery of investment advice as potentially impacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Completed manuscripts are due not later than August 31, 2010.”
Fiduciary duty–the duty of loyalty–is not new. Investment advisors, who are regulated under the Investment Advisers Act of 1940, are already required to conduct themselves according to 70 years of settled law regarding their fiduciary duty toward investors. Fiduciary duty, based on 800 years of common law, is the highest duty in law.
“The importance of research-based analysis founded in the law cannot be overstated,” Knut A. Rostad, chairman of the Committee for the Fiduciary Standard, told WealthManagerWeb.com. The Committee is a group of more than 800 practitioners and leaders from the investment industry that advocates for the fiduciary standard on behalf of investors. This editor is a member of the Committee.
“The SEC is under huge time and resource pressures to complete numerous studies required by the reform legislation. We believe research-based papers from scholars and practitioners on key issues around the delivery of investment advice in a brokerage setting will be very helpful,” Rostad said in the release.
