Nov 22 A key advisory committee to the U.S.
Securities and Exchange Commission unanimously approved a
recommendation on Friday that the agency develop tough new
ethical rules for securities brokers.
The SEC's Investor Advisory Committee, established by the
2010 Dodd-Frank financial reform law, is recommending that the
agency require that brokers act as fiduciaries, or in their
clients' best interests.
The committee wants the SEC to develop a rule based on the
73-year-old law that investment advisers who register with the
agency must follow. Brokers, who are largely regulated by Wall
Street's self-funded watchdog, the Financial Industry Regulatory
Authority, have been largely exempt from the law because their
business traditionally hinged on taking clients' buy and sell
orders, while giving only "incidental advice."
Brokers are now bound to a lesser standard, requiring them
to recommend investments that are suitable, based on factors
such as a client's age or risk-tolerance.
(Reporting by Suzanne Barlyn; Editing by Lisa Von Ahn)