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Purpose - The purpose of this paper is to explain a study released by the Securities and Exchange Commission on January 21, 2011, the "Fiduciary Study," concerning legal and regulatory standards of care for providing investment advice and recommendations to retail customers.
Design/methodology/approach - The paper explains the Fiduciary Study's concern that retail investors do not fully understand the roles played by and the different standards of care that apply to, investment advisers and broker-dealers. It summarizes the SEC's core recommendations concerning uniform investment adviser and broker-dealer standards for conduct, avoidance of conflicts of interest, fiduciary duties, principal trading, duty of care owed to investors, personalized investment advice about securities, and investor education. It summarizes the SEC's recommendations on harmonizing investment adviser and broker-dealer regulations on advertising and other communications, use of finders and solicitors, supervision, licensing and registration of firms, licensing and continuing education requirements for professionals, and books and records.
Findings - The SEC's core recommendations are designed to clarify the respective roles of, and establish uniform standards for, investment advisers and broker-dealers, so that retail investors will be better informed and protected.
Originality/value - This paper provides a useful summary and practical advice from experienced financial services lawyers.
Keywords Investors, Financial management, Legal advice
Paper type Technical
On January 21, 2011, the Securities and Exchange Commission …