August 11, 2010
In regard to your "study examining the effectiveness of regulations governing broker-dealers and investment advisers ... and use of your discretion to impose a legal fiduciary standard on broker-dealers and their registered representatives".
I have 17 years in public and industry accounting and now, 19 years insurance and investment advisor. My record is squeaky clean, as are the records of the vast majority of my peers. A few very visible and unscrupulous agents and advisors can create considerable negative publicity, which hurts all of us in the investment industry. Will additional regulation serve the public interest? My thought is that imposing a fiduciary standard on all registered reps will only create a more litigious environment, drive many good financial professionals out of the business and in effect throw a "wet blanket" over the top of the whole industry.
The public would be better served by simply better enforcement of the regulations that currently exist. I know the level of compliance and oversight that I am subject too on an ongoing basis. I know that it is good for me and good for the industry. If that same level of compliance was applied to "Bernie Madolf" and similar high profile scam artists, their shell games could not have gone on for as long as they did and the damage would have been reduced significantly. I doubt seriously if expanding the fiduciary standards to all broker dealer/registered reps would change this. There will still be the bad apples who will prey on a naive public and create dramatic headlines. There will simply be considerably more money spent on compliance and enforcement ... a whole other level of bureaucracy which places further pressure on an already heavily regulated industry.