On April 18, 2018, the Securities and Exchange Commission (“SEC”) released a 1,000-page set of proposals intended to limit brokers and investment advisers conflicts of interest for non-retirement and retirement accounts. The SEC’s proposal, which has become known as the “best-interest proposal”, is subject to a 90-day comment period and revisions before being finalized. The SEC fiduciary rules comes after the Labor Department’s (“DOL”) “fiduciary rule” was overturned by the Fifth Circuit Court of Appeals in March 2018. The administration has not made clear whether it will appeal the Fifth Circuit’s decision.
In 2010, Dodd-Frank empowered the SEC to impose regulations requiring a fiduciary duty by broker-dealers to their customers. Currently, brokers working with customers on non-retirement accounts are governed by a much weaker “suitability” standard – the investment must be suitable for you, but not necessarily the best option.
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