August 24, 2010
I oppose the SEC's imposition of a "Fiduciary Standard" on Registered Representatives. The "Suitability Standard" governing broker-dealers and registered representatives is, based on my extensive experience, a heavily enforced standard which is applied at the point of service for clients when it's most effective (and efficient) - that is at the time of purchase. This standard also requires follow-up for the public by monitoring the future invesment portfolio for asset allocations consistent with initial risk tolerance and invesment objectives of the investor. Too, periodically the broker-dealer checks on investor's personal info to redetermine that the investment is still suitable. ALL OF THE FEATURES OF THE "SUITABILITY STANDARD" are PROACTIVE. A fiduciary standard is after the fact and ultimately would be mired in open ended lawsuits (the public ends up paying for the affect of these), too vague and changing ideas of "best interest" as decided much after the fact, etc. Further, under the suitability standard if the investment is not suitable the sale does not go through. With the after-the-fact fiduciary standard the harm is already done to the investor.
I am a former (now retired) PriceWaterhouseCoopers Audit Parnter having had most of my client work with those filing with the SEC. My second career was as the VP and CFO with a publicly held company and all it's regulatory filings. For the past 17 years I have been an active financial services professional and licensed reg. rep. I have never witnessed regulations in action that have been as robust and meaningful as the "Suitability Standard". Moving to the SEC regulating broker-dealers and registered representatives via a "fiduciary standard" would be a serious step backward in protection for the investing public. Such a move would most certainly be harmful for the public. Indeed, at best it would merely be a beauracratic system not as easily administered by the SEC and most certainly mostly used by litigators due to the inherent vagueness of "the best interest" thing.