A number of law school professors posted a statement on the CLS Blue Sky Blog (a Columbia Law School blog re. capital markets) regarding the SEC’s recent interpretive release on the standard of conduct for investment advisers. In one paragraph, the professors state:
“Historically, investment advisers were subject to a fiduciary duty, whereas, in the case of brokers, their duty depended on state law. In adopting Regulation Best Interest, the Commission has taken an ambiguous position that may raise the standard for brokers marginally (there is much debate on this point). But it has done so by lowering the standard for investment advisers. We fear this more than offsets any possible improvement in the new standard for brokers.”