Securities Law Prof Blog

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

Thursday, November 17, 2011

FINRA Plans Second Concept Proposal on Broker-Dealer's Disclosure Duties

FINRA CEO Richard G. Ketchum recently stated that FINRA may issue a concept proposal to articulate its position on the disclosure obligations of broker-dealers, in anticipation of the SEC’s release of a proposed uniform fiduciary duty standard for securities professionals (reported in BNA Corporate Law Daily 11/17/11).

 In October 2010 FINRA released for public comment a concept proposal that would require broker-dealers to provide certain disclosures about its products and services, conflicts of interest, and any limitations on its duties, to retail investors at the beginning of their relationship.  Since the comment period expired in December 2010, FINRA has not taken any action on the proposal.  About 55 comments were filed in response to the concept proposal.

In January 2011 the SEC released its report, required under section 913 of Dodd-Frank( Download 913studyfinal), on the effectiveness of existing legal and regulatory standards for broker-dealers and investment advisers.  Since then, although SEC Chair Schapiro has stated on several occasions that the SEC plans to propose a uniform fiduciary duty standard, it has not yet done so.  The SEC website’s timeline for implementing Dodd-Frank lists proposing rules based on the § 913  study by year-end.

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