Statement to New Jersey Bureau of Securities
Summary
SIFMA sent comments to the New Jersey Bureau of Securities’ on the pre-proposal to establish a state-specific fiduciary duty for broker-dealers.
SIFMA strongly supports a heighted standard of conduct for broker-dealers. The best way to accomplish that objective is through a national, uniform standard established by the expert federal regulator, the SEC.
Excerpt
Statement of Kevin Carroll
On Behalf of the Securities Industry and Financial Markets Association
To the New Jersey Bureau of Securities
November 2, 2018
Thank you for the opportunity to present the views of the Securities Industry and Financial Markets Association (“SIFMA”).1 SIFMA represents the interests of hundreds of broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. Many of our members do business and serve retail investors in the State of New Jersey.2 We appreciate the opportunity to comment on the New Jersey Bureau of Securities’ (the “Bureau”) pre-proposal to establish a state-specific fiduciary duty for broker-dealers.3
We respectfully offer the following comments and recommendations:
The Bureau should await the conclusion of the SEC rulemaking process to establish a uniform, heightened, ‘best interest’ standard of conduct for broker-dealers.
First, we urge the Bureau to await the conclusion of the SEC’s Regulation Best Interest rulemaking process before moving forward with its own fiduciary proposal.
In April 2018, the SEC issued proposed Regulation Best Interest and Form CRS (collectively, “Reg BI”) for public comment.4 Reg BI would create a new, nationwide, heightened standard of conduct for broker-dealers. Under the current Reg BI proposal, a broker-dealer making a personalized recommendation about a securities transaction or an investment strategy must:
(1) act in the client’s best interest, without placing their financial or other interest ahead of the client’s interest;5
(2) act with diligence, care, skill and prudence, and carefully weigh the cost of the security in determining whether to make the recommendation; and
(3) disclose and mitigate or eliminate material conflicts of interest.6