Legal Alerts

Uniform Fiduciary Standard For Brokers/Advisors Goes No Where, Slowly


The SEC has been working for more than two years to draft a rule that would impose a uniform fiduciary standard for both brokers and registered investment advisors. Nevertheless, the SEC has scheduled no action on the measure as 2012 winds down, and its unlikely at this point the SEC will have time to enact anything before the end of the year. 

SEC Chairman Mary Schapiro, a long-time supporter of a uniform standard, said other rules will probably take precedence in coming months. “It’s important for us to get this done, but Congress handed us a lot of important things to do,” Schapiro was quoted as saying in a recent interview. “We continue to advance this issue within the building and remain committed to it.” 

The entire dialogue on this topic was generated by Dodd-Frank, the financial-regulation overhaul enacted in response to the 2008 credit crisis, which instructed the SEC to consider mandating that brokers operate under a fiduciary standard as rigorous as that for investment advisers. Its difficult to understand what has taken the SEC so long to act. Consumer advocate groups are in favor of the measure. In fact, a 2011 SEC report said consumers are often baffled by the distinction between brokers and advisers. Further, in a departure from criticism of other Dodd-Frank rules, SIFMA has also supported the change. “SIFMA is very much in favor of establishing a new uniform fiduciary standard for both brokers and advisers where they’re basically doing the same thing for retail customers,” Ira Hammerman, SIFMA’s general counsel, said in an interview. “There are literally trillions of dollars of individual savings and investments that we’re talking about here.” 

Despite general agreement between the SEC, consumer advocate groups and even SIFMA, and despite having several years in which to get something done, the uniform fiduciary standard appears as far from becoming a reality as it ever has.

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