Securities Law Prof Blog

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

Tuesday, June 15, 2010

NASAA Urges Congress to Adopt Fiduciary Duty Standard for Broker-Dealers

NASAA continues its campaign to convince Congress to adopt the House version of the financial reform legislation that calls for the SEC to adopt a fiduciary duty for broker-dealers providing personal advice to retail investors, instead of the Senate version which calls for the SEC to study the issue for a year before undertaking rulemaking. NASAA calls this provision the “single most important investor provision” in the reform package.  I am currently writing an article explaining why this is debating the entirely wrong issue.  I argue that the appropriate standard is professionalism, not fiduciary duty, and that without an explicit federal remedy for negligence, investors' remedies will not be advanced in any meaningful way. 

For a chart from NASAA showing differences in other investor protection provisions in the two bills, see NASAA Urges Lawmakers to Make the Right Choice for Investors.

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