U.S. state securities regulators are reiterating their call for fiduciary duties to be extended to brokers.

The North American Securities Administrators Association is urging the U.S. Securities and Exchange Commission to extend fiduciary duties to anyone who provides investment advice about securities, regardless of whether they are investment advisors or broker-dealers.

As part of the U.S. regulatory reform effort, the SEC is studying whether to extend the fiduciary duty, to which investment advisors must currently adhere, to broker dealers as well.

“We believe that the standard applicable to persons providing investment advice should be the fiduciary duty currently applicable to investment advisors,” said NASAA’s president, and Texas Securities Commissioner, Denise Voigt Crawford, and NASAA president-elect, David Massey, North Carolina Deputy Securities Administrator, in a comment letter to the SEC.

“When receiving investment advice, investors deserve and should be afforded the same level of protection and care no matter which type of securities professional they engage,” they said. “As the brokerage business has evolved to include more advisory activities, having two separate and differing standards governing the provision of investment advice no longer makes sense.”

NASAA says that studies have shown that the public is confused about the distinction and mistakenly believes that broker-dealers already act as fiduciaries. Adopting a fiduciary duty for individuals giving investment advice regardless of their title will “accomplish the dual mission of eliminating investor confusion and enhancing investor protection for retail investors,” the comment adds. And they say the benefits will outweigh any costs to the industry, which may push for a lesser standard.

IE