The number one complaint in FINRA arbitration cases is breach of fiduciary duty. The increased use of structured products plus the passage of the JOBS (Jumpstart Our Business Startups) Act puts the issue of holding brokers to a fiduciary standard at the forefront.
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The JOBS Act allows public solicitation of private equity investments. The Dodd-Frank Act strongly encourages placing brokers under the fiduciary standard, the standard under which RIAs function.
So the effort to bring brokers under the fiduciary standard will likely heat up again after the election. The creation of a self-regulatory organization (SRO) will also come back into focus next year.
Both issues will come once again under scrutiny and there will be different players on the field when they do. The SEC is already significantly behind on creating rules mandated by Dodd-Frank and the added complexity of having to oversee hedge fund advisors.
The increased numbers of advisors the SEC has to monitor will continue to challenge the SEC’s oversight capabilities. And while brokers do not want to come under the RIA definition of a fiduciary, RIAs also do not want the fiduciary standard
to be diluted so that both types of advisors can be included.