With this request, the SEC has reopened a major issue in retail-financial advisory and securities services: the duty of care owed to customers by broker-dealers and investment advisers. Although a request for data to inform future SEC action (if any), the release outlines a number of policy alternatives the SEC could follow to impose a duty of care on broker-dealers, make this consistent with that of investment advisers, otherwise regulate both sets of advisers or do nothing in this contentious arena. Reflecting strong opposition to conclusions of an earlier SEC staff study, the release also provides SEC rebuttals to several assumptions it believes opponents made – e.g., that a new broker-dealer duty would bar commission income and mandate continuing monitoring of customer circumstances. Nevertheless, the release posits a fundamental rewrite of the manner in which broker-dealers and, perhaps, investment advisers council retail customers, laying out a framework that, depending on how it is finalized (if at all), would also put pressure on bank regulators and, perhaps, the CFPB to change the duties applicable to other investment advisers and market intermediaries in the asset-management, wealth-management and investor-advisory arenas.
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