SEC Proposes Enhanced Standards for Advice to Retail Investors
Client Memorandum

Created date


The SEC recently proposed rules and interpretations seeking to enhance the standard of conduct of broker-dealers and investments advisers when they interact with retail investors.  This action comes more than ten years after an SEC-commissioned study by the RAND Corporation found that retail investors generally did not understand the differences between broker-dealers and investment advisers, and seven years after a Dodd-Frank Act-mandated SEC staff study evaluating the need for uniform fiduciary standards between broker-dealers and investment advisers.  Although the proposals do not impose a uniform fiduciary duty, as authorized by the Dodd-Frank Act, the set of new requirements would substantially increase the obligations imposed, particularly on broker-dealers, when providing investment advice to retail investors, while attempting to allow the commission-based brokerage model to remain viable.