August 9, 2010
The purpose of this letter is to provide the Securities and Exchange Commission with comment on the required Study Regarding Obligations of Brokers, Dealers and Investment Advisors.
I am an attorney whose practice is exclusively devoted to the representation of public investors in their disputes with the securities industry. Moreover, I am the immediate-past President and a current member of the Board of Directors of the Public Investors Arbitration Bar Association (PIABA) and am a current public member of FINRAs National Arbitration and Mediation Committee (NAMC).
As Chairman Schapiro recently noted in her July 27, 2010 speech before the Center for Capital Markets Competitiveness in Washington, D.C., in recognition of the primary and central importance of investor protection, a uniform fiduciary standard that requires broker-dealers and investment advisors to both place the interests of their customers first and foremost, above all else, is not just common sense, but it is a standard that would promote both market efficiencies and capital preservation – concepts that are critical to investors especially given the recent economic events that have transpired over the course of the past few years.
Simply put, if the financial services industry is going to regain the confidence of investors and restore the integrity that used to be the hallmark of our capital markets, the Commission can no longer allow investors to be subject to different standards of care that are predicated solely on the title that appears on the proverbial business cards of their financial representatives – whether that title is broker, adviser, consultant or otherwise.
To the contrary, I would submit that the standard of care should be predicated on doing what is right for investors and that the most logical standard of care, for actually doing what is right, would be to impose a fiduciary standard on all financial representatives.
Nothing more is needed and nothing less should be acceptable.