Ketchum: FINRA May Issue Second Proposal Regarding Possible SEC Fiduciary Duty Rule

November 17, 2011 – In The News
BNA Daily Report for Executives

Reproduced with permission from Daily Report for Executives, 222 DER EE-13 (Nov. 17, 2011). Copyright 2011 by The Bureau of National Affairs, Inc. (800-372-1033). < >

FINRA Chairman and Chief Executive Officer Richard G. Ketchum announced the Financial Industry Regulatory Authority may issue an additional concept proposal to articulate its position on disclosure obligations associated with a possible Securities and Exchange Commission rulemaking project.

Currently, investment advisers have fiduciary obligations to their customers as defined by the Investment Advisers Act of 1940. Broker-dealers are currently subject to suitability rules that will be superseded Aug. 9, 2012, by two new FINRA rules that articulate broker-dealer suitability standards.

Fox Rothschild LLP partner Joshua Horn and co-chair of the firm’s securities industry practice told BNA that adopting a unified fiduciary duty for both investment advisers and broker-dealers could help FINRA enhance enforcement actions.

“You're seeing a trend already of heightened enforcement proceedings, and I think if you have a uniform fiduciary duty you'll see even more” FINRA enforcement proceedings, he said. “If you look at a fiduciary duty standard rule as opposed to a suitability rule, I think it's a harder and faster rule, a more rigid rule, than suitability.”