Barney Frank Directs SEC to Not Impose Advisers Act Fiduciary Standard on Broker-Dealers

May 31, 2011

In a letter to SEC Chairman Mary Schapiro, Barney Frank, who is the ranking member of the House Financial Services Committee, directed the SEC to not put broker-dealers under the exact same fiduciary standard that the investment advisers are subject to under the Investment Advisers Act of 1940 (the “Advisers Act”).


Representative Frank said in the letter that, while Section 913 of Dodd-Frank Act provides the SEC the authority to establish a new fiduciary standard of care for broker-dealers, “the requirement that the new standard be ‘no less stringent’ …was not intended to encourage the SEC to impose the Investment Advisers Act standard on broker-dealers, but to ensure the new standard would not be a ‘watered down’ version of the investment advisors’ fiduciary standard.”  He further stated that had Congress intended the SEC “to simply copy” the Advisers Act standard for brokers-dealers, it would have repealed the broker-dealer exemption.


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Investment Advisers, Regulatory