As reported in the previous issue of the Financial Services Update, on March 1, 2013, the Securities and Exchange Commission (the "SEC") issued a release requesting data and other information to assist the SEC in its consideration of whether to make new rules regarding the standards of conduct and regulatory obligations for broker-dealers and investment advisers.
The release explains that investment advisers are subject to differing regulatory schemes (for investment advisers, the Investment Advisers Act of 1940, as amended; for broker-dealers, Securities Exchange Act of 1934 and the rules of each self-regulatory organization ("SRO") to which the broker-dealer belongs). The SEC issued this release as part of an effort to determine whether it should undertake rulemaking to adopt rules establishing a uniform fiduciary standard of conduct for all broker-dealers and investment advisers when providing personalized investment advice about securities to retail customers. In the press release accompanying the release, the SEC explained that, in particular, "the SEC is requesting data and other information from the public and interested parties about the benefits and costs of the current standards of conduct for broker-dealers and investment advisers when providing advice to retail customers, as well as alternative approaches to the standards of conduct." The release provides a list of information that the SEC is requesting from investment advisers and broker-dealers (which information request includes estimates of the costs that investment advisers and broker-dealers would bear in implementing a new standard of care), as well as guidelines for the submission of information.
The release also contains an overview of concepts that the SEC is considering including in a uniform fiduciary standard of conduct for investment advisers and broker-dealers. While the SEC has not yet determined whether it will use its authority to adopt a uniform standard of conduct, the SEC release states that such a uniform standard would include both the duty of loyalty and the duty of care, and the release discusses potential approaches to both. The release explains that the SEC could decide to take no action and, in doing so, preserve the standards currently in place.
Anyone who wishes to submit comments should do so before July 5, 2013. A copy of the release may be found
Sarah M. Hesse