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Casebook Read Credits
Topics in Financial Regulation: Consumer and Investor Protection
Section 2 . 2
1.5 hours + 4 links

TFR Class Three: Securities Firms and Retail Investors

J. He,
Howell E. Jackson

In today's class, we will focus on the duties of broker-dealers on the one hand and investment advisers on the other. Both kinds of firms are subject to SEC oversight, but operate under legal duties that have diverged over time. We will begin our discussion by looking at series of recent cases exploring the differences in these duties and the exemptions from the Advisers Act which allows broker-dealers to offer investment advice without registering as Advisers. We will then consider on-going efforts to harmonize fiduciary duties in this area, a topic designated for SEC study and potential action in the Dodd-Frank Act of 2010. Readings consist of the executive summary of the SEC's January 2011 study and a law firm memorandum chronicling subsequent developments. For those interested in more background on the duties of broker-dealers, I have included a chapter from The Regulation of Financial Institutions (West 1999) which include an overview of the subject. This reading is entirely optional and included only for those interested in exploring the topic in more detail.

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