Brokerage firms routinely advertise that they put their clients’ best interests ahead of their own, says The Wall Street Journal.
But when their clients allege in arbitration claims and litigation that brokers have mistreated them, the firms often respond that they owe no fiduciary duty to their clients, says a report released Wednesday by the Public Investors Arbitration Bar Association, a trade group of attorneys who represent individual investors in claims against brokers and other securities salespeople.
Kevin Carroll, associate general counsel at the Securities Industry and Financial Markets Association says there isn't any inconsistency: “In an arbitration, [brokerage] firms can only say they aren’t being held to a fiduciary standard by current regulation. They can’t lie and say they’re being held to a standard that they’re not being held to.”
On Tuesday, Securities and Exchange Commission Chairwoman Mary Jo White said she expects the agency to develop rules on subjecting brokers to a fiduciary standard “in the very near term.”
And the Labor Department has drafted a regulation that would apply the fiduciary standard to all investment professionals responsible for managing retirement accounts.