The front page of The New York Times today reveals what a joke SEC regulation and investor protection is.
JP Morgan is accused by former brokers of selling proprietary (“house brand”) mutual funds instead of other funds because advisors got fatter commissions. “Financial advisers say they were encouraged, at times, to favor JPMorgan’s own products even when competitors had better-performing or cheaper options,” reports The Times.
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The sales abuses were an open secret then as they are now. (An SEC study, ironically led by Merrill Lynch’s Chairman Daniel Tully, found widespread mutual fund sales practice abuses in 1995
You fiduciaries ought to be blogging about this madness.
This is happening just a few days after the trading loss racked up (by a former classmate of mine) was estimated to total $9 billion
To be clear, the SEC is a joke because it’s not created a deterrent to prevent Wall Street brokerages from selling house-brand mutual funds that pay brokers more than other funds, creating an unforgiveable conflict of interest that has screwed investors many decades, and everyone who understand Wall Street knows this.
RIAs should rise up against the SEC and be advocates for investor protection by writing their Congressional representatives and getting membership groups to advocate for investors. That’s what a fiduciary should do.
Advisors must be pro-consumer. Niot just pro-advisor.