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New SEC Rule: More Disclosure, Less Broker Conflicts

On Behalf of | Jun 6, 2019 | Blog, Regulatory Issues (SEC & FINRA)

Do you have any real or perceived conflicts of interests? Your answer will be crucial after the Securities and Exchange Commission’s adoption of a rule designed to curb conflicts of interests and provide investors with more information about their brokers.

As reported by The Wall Street Journal, “stockbrokers will be required to act in the best interest of investors and disclose more about conflicts of interest that can skew advice”. The SEC “voted to create a duty to investors for brokers that the industry says is higher than its current standard.” (Source: “New SEC Rule Heightens Broker Responsibilities to Investors“, The Wall Street Journal)

This is only the latest salvo in a 10-year battle over whether and how to regulate the investment advice industry. Only last year, a similar rule from the Obama-era Department of Labor was overturned. This version is considered a win for Wall Street as it still allows brokers to recommend investment products that they profit from as long as they disclose the potential conflict.

What this means for you

The rule goes into effect on June 30, 2020. Love it or hate it, but don’t ignore it. Finding yourself on the wrong side of this new SEC rule can place you in the crosshairs of SEC investigators or, in some cases, federal prosecutors.

Ford O’Brien Landy LLP has a proven track record of helping brokers and investment companies stay on the rights side of SEC rules and, when necessary, protect their interests in civil and criminal cases.