July 30, 2010
The entire issue is nonsense as long as customers have recourse only through Finra. Finra Enforcement will never enforce any standard against its members except to the extent that it periodically needs to pretend to regulate the industry instead of kissing its collective backsides. Bernie Maddoff is a good example. Finra had primary responsibility for inspecting his firm and was afraid to even ask what he wss doing with thousands of discretionary accounts. A different standard would have made no difference.
Finra Dispute Resolution is dedicated to ensuring that the customer never really wins much and that its members aren't ever held fully responsible for their actions. Brokers have had a fiduciary duty in Missouri since 1965 under a ruling by the state Supreme Court. In over 20 years of forced Finra arbitration the arbitrators have uniformly and openly laughed at the concept.
You are talking about a distinction without a difference unless customers are given the right to enforce the fiduciary standard.