Regulation of Global Financial Firms After Morrison v. National Australia Bank

(Excerpt) Part I of the Article reviews the Morrison decision with particular focus on the regulation of non-U.S. firms. Part II discusses SEC regulation of non-U.S. domiciled investment advisers and broker-dealers, focusing on elements of regulation most relevant to Morrison. Part III identifies regulatory challenges arising from Morrison

Selling Advice and Creating Expectations: Why Brokers Should Be Fiduciaries

Investors face a dizzying array of choices regarding where to invest their funds and increasingly rely on experts for advice. Most advice about securities is provided by investment advisers or broker-dealers, legal categories with little meaning to most people but fraught with consequences. Although advisers and brokers often perform the same function, advisers are subject to a strict fiduciary standard to act in their clients’ best interest while brokers are subject to a less rigorous standard of suitability to ensure that their recommendations are suitable for customers. In 2010, the Dodd-Frank Act authorized the U.S. Securities and Exchange Commission (SEC) to harmonize the regulation of advisers and brokers and impose a fiduciary duty on brokers that give advice. This Article is about whether the SEC should exercise its authority. After explaining the historical context of the debate over a fiduciary standard, the Article critiques common arguments for a fiduciary duty, concluding that they are incomplete and do not alone justify a change in the law. The Article then puts forth a better justification, based on the reasonable expectations of investors. Reasonable expectations arise from brokers marketing their services as advisory and using titles, such as financial advisor and financial consultant. Reasonable expectations provide a stronger justification for a fiduciary standard than the conventional arguments

Harmonizing the Regulation of Financial Advisers

When buying stocks, bonds, mutual funds, and other securities, individuals seeking advice typically turn to broker-dealers or investment advisers before they invest. In many cases, brokers and advisers perform similar functions but they are regulated differently under laws enacted during the Great Depression. Regulators are considering ways to harmonize the regulation of these professionals, but harmonization is fraught with difficulties. This chapter discusses the debate over harmonization and explains how the US Securities and Exchange Commission, the courts, and Congress have responded. The chapter concludes with insights into considerations that will likely determine how the harmonization debate will be resolved

Fiduciary Obligations of Broker-Dealers and Investment Advisers

The article discusses fiduciary obligation that broker-dealers and investment advisers owe their clients. It addresses questions in ascertaining whether financial reform is needed. The fiduciary obligations imposed on brokers and advisers are examined. An analysis of whether fiduciary duties should be imposed on brokers providing advice is offered

Fiduciary Obligations of Broker-Dealers and Investment Advisers

The article discusses fiduciary obligation that broker-dealers and investment advisers owe their clients. It addresses questions in ascertaining whether financial reform is needed. The fiduciary obligations imposed on brokers and advisers are examined. An analysis of whether fiduciary duties should be imposed on brokers providing advice is offered

Regulation of Global Financial Firms After Morrison v. National Australia Bank

(Excerpt) Part I of the Article reviews the Morrison decision with particular focus on the regulation of non-U.S. firms. Part II discusses SEC regulation of non-U.S. domiciled investment advisers and broker-dealers, focusing on elements of regulation most relevant to Morrison. Part III identifies regulatory challenges arising from Morrison