August 24, 2010
Thank you for the opportunity to comment regarding the obligations of broker-dealers and investment advisors. I am an attorney who primarily represents customers who have disputes with broker-dealers. There should be a standard uniformly applied to brokers and investments advisors, provided that this standard is a real fiduciary standard, which carry duties of loyalty, full disclosure, adequate diversification, putting the client first, keeping the client abreast of market conditions, and explaining the practical impact and risks of transactions.
Many retail broker-dealer customers go to these firms seeking not only their brokerage services but investment advice as well. The line between investment advisors and broker-dealers has been blurred to the point that there is not much distinction between the two. In reality, customers seek investment advice from brokers as much as investment advisors, so creating different standards for the two does not make practical sense.
Many brokers have written letters in opposition to the application of a uniform standard. Brokers are licensed professionals, much like attorneys, doctors, and CPAs. These professionals have fiduciary standards to their clients, and securities brokers should not be treated any differently.
To the extent a uniform fiduciary standard is applied to both investment advisors and broker-dealers, I would hope that such an SEC rule would not preempt state law fiduciary requirements in those states which impose such duties on brokers. Thank you again for the opportunity to comment.
David Neuman, Esq.
Stoltmann Law Offices, P.C.