Broker-Dealer, Fiduciary Duty, Finance, Investing


This article contends that even with the inconsistent regulatory and statutory framework governing financial service providers, under common law, brokers have historically been held to a fiduciary standard of care when providing personalized investment advice to retail customers or when holding themselves out to the public as trusted financial advisors who provide unbiased investment advice. The Article examines the historical origins of broker-dealers as fiduciaries; uses statutory construction to give effect to the clear intent underlying Congress’ enactment of the Investment Advisers Act of 1940; and analyzes judicial treatment of broker-dealers, including the legal reasoning of why the Securities Exchange Act of 1934 provides a lower level of protection and was never meant to regulate personalized investment advice. Having two different standards of care regulating identical conduct is harmful to consumers; to alleviate this harm, the article provides solutions for the SEC to move forward including the removal of the broker-dealer exemption from the Investment Advisers Act of 1940 and the creation of a new uniform fiduciary duty for broker-dealers and investment advisers under Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.