The Securities Industry and Financial Markets Association (SIFMA) today submitted comments to the Securities and Exchange Commission (SEC) in advance of its study on the obligations of investment advisers and broker dealers.
“It’s time for all those who provide personalized investment advice to individual investors to be held to a uniform standard of care,” said Ira Hammerman, senior managing director and general counsel at SIFMA. “We’ve asked the SEC to provide a clear definition of any uniform standard of care that it adopts and preserve individual investor choice and access to the advice, services and products they want and deserve.”
In comments to the SEC, SIFMA highlighted the following key principles the Commission should focus on during their six month study:
• The interests of individual investors should be put first. When providing personalized investment advice to individual investors, broker-dealers and investment advisers should deal fairly with clients.
• Broker-dealers and investment advisers should appropriately manage conflict of interest by providing individual investors with full disclosure that is simple and clear and allows them to make informed investment decisions.
• Individual investors should continue to have access to a wide range of investment products and services, a choice among financial service provider relationships and options for paying for financial services and products.
• Any standard of conduct adopted by the SEC should reduce confusion about existing legal and regulatory regimes by being the exclusive uniform standard that applies to broker-dealers and investment advisers when providing personalized investment advice about securities to individual investors.
In addition, SIFMA requested that the SEC ensure that broker-dealers be able to provide individual investors with best execution and liquidity as principal and offer proprietary and affiliated products that certain investors desire. As noted in the letter, broker-dealers offer a variety of products on a principal basis, including fixed-income products such as municipal bonds, initial public offerings and other underwritten offerings.
The comment letter can be found at the following link: http://www.sifma.org/assets/0/232/234/124802/bcb2b9b1-5a0f-4f20-bda3-690160807abb.pdf.
The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the SEC to conduct a six month study to evaluate the effectiveness of standards of care applicable to broker-dealers and investment advisers for providing personalized investment advice to individual investors. On July 27, the SEC published a request for comment to inform its study on the issue, with comments due to the Commission on August 30, 2010.
Over a year ago, SIFMA publicly supported a clearly defined, uniform federal fiduciary standard of care for advisers and brokers as originally outlined in President Obama’s reform white paper. Several member firm representatives have also testified before Congressional Committees on the matter.
