Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, December 15, 2009

House Bill Allows Broker-Dealers to Switch Hats

Investment News reports on a provision buried in the financial reform legislation passed by the House last year that would allow broker-dealers to switch hats.  The legislation would require the SEC to adopt rules that would establish a fiduciary duty for brokers who provide investment advice; however, the bill goes on to say that “Nothing in this section shall require a broker or dealer or registered representative to have a continuing duty of care or loyalty to the customer after providing personalized investment advice about securities.”  Purportedly added after lobbying by discount brokerage firms, the investment advisory community is up in arms.  InvNews, Adviser groups blow tops over House bill's ‘hat-switching' clause.

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