July 5, 2017
I have worked In the advisory and broker dealer channels for nearly 40 years. I am a Chief Compliance firm of both a Broker Dealer and Registered Investment Advisory Firm.
It’s obvious to me that the bureaucratics who crafted that bill do not understand the capital formation process, at least here in the United States.
When companies and other security issuers need money for capital formation, expansion, etc., they go to a Broker Dealer, to raise capital. Asking them to also represent the client is riducalous, their clients are the Company that is seeking Capital. Broker Dealers spend much of their time on Due Diligence, to see if an Issuer or a capital offering passes many underwriting hurdles to protect their clients and firm. Asking them to also be Fiduarcies as well, only exposes the Broker Delaer firm and the representatives to new litigation.
The high net worth clients of Broker Dealers, have and want to continue to invest in private equity to diversify their portfolios to seek non-correlated aggressive investment opportunities. The DOL Rule would largely cut them out from further participation to use their own money in their retirement accounts to pursue these opportunities in the capital markets. This is a form of economic discrimination.
Many Real Estate State Regulatory Boards in the US, have opted to move in the opposite direction for decades now, to represent just the “Transaction”. In Florida for example, where once there was a choice of how the Client and a Real Estate Agent would interact, (Fiduciary or Non-Fiduciary) to represent a Client. Today, they solely represent the Transaction, acting to represent the Client is no longer permitted. Florida, the 3rd largest state in the US, found it did not work. Many real estate investors have bought real estate in IRAs and other retirement accounts for decades.
Paul McIntyre, Compliance Officer
CRC®, PPC™, AIF®
5 Centerpointe Drive, Suite 400
Lake Oswego, OR 97035
Office Phone: 503.505.6881
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