Dodd-Frank Act Empowers the SEC to Impose Fiduciary Duties on Broker-Dealers

10/21/2010


The Wall Street Reform and Consumer Protection Act (also known as the “Dodd-Frank Act”), enacted on July 21, 2010, empowers the Securities and Exchange Commission (the “SEC”) to impose on broker-dealers fiduciary duties to their retail customers when providing them with personalized investment advice about securities. This new law authorizes the SEC to issue rules setting a uniform standard of conduct for brokers, dealers and investment advisers which will require them to act in the best interests of their customers without regard to their own financial or other interests. The new SEC rules, if issued, must prescribe a standard of conduct no less stringent than the fiduciary standard that governs investment advisers to broker-dealers when they provide personalized investment advice about securities to retail customers. Broker-dealers will not, however, owe their retail customers fiduciary duties when performing other actions, such as executing trade orders. Read more ...