Subject: File No. 4-606
From: Critz H George
Affiliation: retired VP Operations, environmental engineering

September 15, 2010

With respect to the obligations of brokers, dealers investment advisors:

You will receive many comments seeking to avoid regulation in this area. But the only justification for the status quo is the desire to promote an image of client loyalty while "pushing" product that serves the interests of the agent's employer or the commission income of the broker/agent, himself. Rather than encouraging misplaced client confidence, regulations should seek to level the playing field by rules which make misrepresentation of motives less likely, at the least.

So, a first order requirement might be an explicit statement by the broker/agent that he is NOT formulating his advice based upon the interests of the investor/client. Such a statement, along with an explanation of the institutional arrangements and profit motivations within which the broker/agent operates could be required in the form of a consumer warning brochure that must be available and pointed out by the broker/agent before every advisory consultation with a client.

Otherwise, any new rules could just require that the agent/broker provide advice within the framework of fiduciary responsibility to the client and make clear the grounds for civil suit if such fiduciary responsibility is violated. Equally, the broker/agent's employer could be held liable for instructing its agents to "push" financial products from its inventory of such products, unless it is willing to make payments to the client in an amount representing some discount to market. This discount would be a metric for the value brought to the client by the brokerage firm.

Similar rules could be formulated for agents selling insurance products.