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Understanding the Standard of Care for Broker-Dealers and the Department of Labor’s Fiduciary Rule

Posted in Broker-Dealer Regulation, Investment Adviser Regulation

Until recently, broker-dealers operating in the United States weren’t subject to a fiduciary standard when dealing with their retail clients.

The passage of the Dodd-Frank Act in 2010 included a provision enabling the Securities and Exchange Commission to consider and propose a higher standard of care for broker-dealers – something which it has not yet done but appears intent on pursuing this year. The Department of Labor (DOL) on its own adopted a fiduciary standard in 2016 for retail clients. This has been met with much controversy and criticism. President Trump weighed into the debate, ordering the DOL in early 2017 to re-evaluate the rule and its impact, pushing the DOL to postpone the DOL rule’s full implementation to 2019.

The report explains how the rule works and its impact in practice, taking into account uncertainty as to its final version.

Read our report here.