August 24, 2010
The suitability standard governing broker-dealers and registered representatives is a robust and heavily enforced standard. Compliance costs-both in terms of finances and time-are high, and those costs are eventually felt by clients. Adding another layer of regulation means another layer of compliance, and even more cost to clients. The suitability standard governing broker-dealers is more than sufficient to protect the rights of consumers. The proposed Act does not define what the rules are for compliance with a legal "best interest" standard - thus subjecting registered representatives to the potential of never ending lawsuits. The fiduciary standard in essence adds a vague legal liability standard that looks back (sometimes after many years) and is enforced after the fact by the SEC or trial lawyers who have perfect vision in hindsight. In short, we already have enough regulations in place to protect the consumer. Adding a new layer of regulations would be counter productive for both the registered representatives and their clients.