SIFMA Unveils New Pro-Consumer Reforms

Release Date: July 17, 2009
Contact: Andrew DeSouza, (202) 962-7390, 

SIFMA Unveils New Pro-Consumer Reforms 

Adopts Administration Proposed Language for Creation of a New, Federal Fiduciary Standard 

Washington, DC, July 17, 2009-The Securities Industry and Financial Markets Association (SIFMA) today announced that its Private Client Group Steering Committee unanimously supports a new federal fiduciary standard for broker-dealers and investment advisers who provide personalized investment advice. The proposed uniform set of regulatory standards is designed to strengthen safeguards for investors.

"SIFMA wants to deliver clear, understandable reforms and strong, consistent protections for America's investors," said SIFMA President and CEO Timothy Ryan. "Under this new, federal fiduciary standard, it won't matter who is giving the advice - broker or adviser - investors will be protected by the exact same federal fiduciary standard when receiving the same services."

Today, the standard of care provided to individual investors by broker-dealers and investment advisers can be different because the two groups are regulated by different legislation. Studies show this has created confusion for investors. Embracing proposals laid out by the Obama Administration July 10, SIFMA believes that individuals receiving personalized investment advice should be protected by the same standard, no matter who provides it. The administration's legislation states these two groups should, "act solely in the interest of the customer or client without regard to the financial or other interest of the broker, dealer or investment adviser providing the advice."

"After nearly 70 years of confusion, with separate broker and adviser regulations, we have an opportunity to start anew," said John Taft, head of RBC US Wealth Management, and chair of SIFMA's Private Client Group and member of the Board of Directors. "A new fiduciary standard will provide clarity to consumers while expanding investor protection to a broader range of personalized investment advice."

SIFMA believes that the SEC is best positioned to ensure a federal fiduciary standard is clearly and equally applied, so that all individual investors receive the same protections when receiving the same kinds of personalized investment advice. The term "personalized investment advice" was described by SEC Chairman Mary Schapiro in a June 18, 2009 speech to define the circumstances under which a fiduciary duty should apply to both brokers and advisers. This view is consistent with the Treasury Department's June 17 White Paper.

Investment advisers, however, do not offer the same broad range of services as broker-dealers, such as raising capital for business or mergers and acquisition activity. Therefore, when broker-dealers operate in business areas where advisers do not, and where personalized advice is not involved, SIFMA believes the current standards and rules should apply.

SIFMA's Private Client Group represents a large cross section of global, regional, independent contractor, and small financial services firms that provide services to individual investors all across America. The Private Client Group and its committees work with the SIFMA Board to ensure that individual investor issues are properly addressed throughout the SIFMA membership.

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The Securities Industry and Financial Markets Association brings together the shared interests of more than 650 securities firms, banks and asset managers. SIFMA's mission is to promote policies and practices that work to expand and perfect markets, foster the development of new products and services and create efficiencies for member firms, while preserving and enhancing the public's trust and confidence in the markets and the industry. SIFMA works to represent its members' interests locally and globally. It has offices in New York, Washington D.C., and London and its associated firm, the Asia Securities Industry and Financial Markets Association, is based in Hong Kong.



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