Do You Trust Your Broker?

When your broker suggests that you put your money into one of her picks, is it good for you?

Brokers’ duties include fair dealing, suitable recommendations, accurate disclosure, trade only by client instruction and avoiding excessive trading.  See: http://www.finrafoundation.org/web/groups/foundation/@foundation/documents/foundation/p119054.pdf

However, there is no duty to put your interest before theirs. So, that investment with the 6% front end load and back end penalty, that’s OK.

Now, however, Securities and Exchange Commission Chairman Mary Jo White has come out pushing for requiring that brokers have a fiduciary duty to their clients, a significantly heavier burden.
http://www.bloomberg.com/news/articles/2015-03-17/sec-will-develop-fiduciary-duty-rule-for-brokers-white-says

About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
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