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Making law in America is not a simple task. It can be legislated by Congress, enforced by the executive, interpreted by the courts, and augmented by a massive body of rules created by administrative agencies such as the Securities and Exchange Commission (SEC). The Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) (Dodd-Frank was passed) with an eye to preventing future financial crises. Four years later, many details of Dodd-Frank have yet to be finalized as the SEC is still in the process of developing the regulations that the legislation required them to create. Even once the regulations are finalized by the SEC, the regulations will be challenged by various parties in the courts. The regulations will be either upheld or rejected. Those that are upheld will then face numerous challenges when applied in specific cases, while those rejected will have to be redone all over again. The process of developing these regulations is cumbersome and attracts many of the special interests that were present in the legislative phase of Dodd-Frank and who will also be present in the litigation phases of testing Dodd-Frank in the courts. This paper focuses on the requirement that investment advisors and broker-dealers be deemed as owing fiduciary duties to their clients as a case study for the entangled political economy theory. The paper shows how the development of a simple rule such as whether these fiduciary duties should be owed or not requires years of back and forth between the legislative, executive, administrative, and judicial branches.

This article provides an overview of the US Securities and Exchange Commission’s (SEC) recent approval of a package of rulemakings and interpretations designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers.

The article provides legal analysis for and historical context of the requirements of the SEC’s adopted rules, Regulation Best Interest and Form CRS in addition to the two separate interpretations under the Investment Advisers Act of 1940, the Standard of Conduct for Investment Advisers; and the Broker-Dealer Exclusion from the Definition of Investment Adviser.

The SEC’s adopted regulatory package does not adopt a uniform fiduciary standard for broker-dealers and investment advisers but instead promulgates legal requirements and mandated disclosures in order to conform to the SEC’s perceived expectations for reasonable investors.

Investment advisers and broker-dealers should consult with their legal counsel in assessing how and to what extent the new regulatory package is applicable to them.

This article provides practical guidance from lawyers who have extensive experience with the Investment Company Act, Investment Advisers Act, and the Securities Acts.

Explains the US Department of Labor’s newly proposed “Conflicts of Interest” rule and provides a critical analysis of its impact should it be adopted as proposed.

Explains the DOL’s proposed Conflict of Interest rule and discusses how it changes the current fiduciary standards of care under ERISA. The article then probes more deeply into the practical matters involved in implementing the rule, and into the realities of how it would impact fiduciary standards generally, investors, the financial services industry and securities arbitrations. Reactions to the proposed rule are then explained against the backdrop of the practical implications thereof.

This article concludes that the DOL’s proposed Conflict of Interest rule, albeit well-intended, is not reasonably designed to achieve its stated goal and would instead likely harm those whom it purports to help. Ironically, it also potentially waters down the existing high standards of current fiduciaries. The article supports the DOL’s goal of greater responsibility for financial service professionals and proffers an alternative solution that could achieve the desired result more effectively.

This article offers valuable insight on the realities of the proposed law and practical guidance on its implications to the investing public, the financial services industry and securities attorneys.

The following is an overview of how the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), applies to securities professionals such as registered investment advisers (“RIAs”) and registered broker‐dealers who advise, manage, or trade for investment portfolios of employee benefit plans subject to ERISA. The principal focus of this outline is on securities registered under the Securities Act of 1933 (the “1933 Act”) and the Securities Exchange Act of 1934 (the “1934 Act”), and securities of investment companies registered under the Investment Company Act of 1940. Many of these principles also will apply directly to unregistered securities, as well as to other investments offered by banks, insurance companies, commodity trading advisers and real estate advisers, though there may be some variation.

This article outlines, in a very practical manner, the various methods available to investment advisors when trying to effect securities transactions for their clients. The authors examine several different ways the transactions may take place while describing in detail the pitfalls and concerns that must be considered by the careful practitioner. It also contains helpful illustrations to understand the transactions.

The purpose of the paper is to summarize and discuss selected investor‐protection and other related enhancements to federal securities regulation contained in the Dodd‐Frank Wall Street Reform and Consumer Protection Act.

The paper discusses the following investor protections and related enhancements: enhanced whistleblower incentives and protections; expanded SEC investor‐protection administrative functions including the establishment of an Office of the Investor Advocate, the appointment of an Ombudsman, and the establishment on a permanent basis of an Investor Advisory Committee; expanded enforcement authority against aiders and abettors of securities violations; evaluation of the existing standards of care employed by broker‐dealers and investment advisers; a narrowing of exemptions from registration under the Securities Act, including by directing the SEC to enact rules to disqualify “bad actors” from relying on Rule 506 of Regulation D and adjusting the definition of “accredited investor” for purposes of the SEC's rules under the Securities Act; an exemption for certain small companies from the auditor attestation requirements of Sarbanes‐Oxley; provisions to increase the oversight and accountability of credit rating agencies; and steps to bolster the regulatory oversight of the municipal securities market, including by creating a new class of regulated intermediaries – “municipal advisors”

The Dodd‐Frank Act leaves many critical issues to be fleshed out through further SEC rulemaking and in the implementation phase, including: procedures regarding whistleblower information submitted to the SEC; the actual role of the Office of the Investor Advocate; whether the SEC will adopt a broker‐dealer fiduciary‐duty standard of care; additional texture on rules disqualifying bad actors from relying on Rule 506 of Regulation D; adjustments to net worth requirements related to accredited investor status; rules on disclosure of credit ratings in registration statements; and qualification standards for municipal advisors.

Public companies and other persons affected by the Dodd‐Frank Act should: keep abreast of key developments in the rulemaking phase; possibly participate in the rulemaking process: develop realistic strategies to respond to the proposed rules; develop compliance action plans; and review whistleblower‐related compliance policies and procedures.

The paper provides expert guidance from experienced securities and financial services lawyers.

Part I of this series appeared in the Summer 2002 issue of The Journal of Investment Compliance. It addressed the regulation of wrap fee programs under the Investment Company Act of 1940 (“Investment Company Act”) and the requirements of Rule 3a‐4 thereunder, which must be met so that a wrap fee program is not deemed to be an investment company. Part I also discussed certain issues arising under the Investment Advisers Act of 1940 (“Advisers Act”), including how program sponsors and any third‐party portfolio managers generally are viewed as investment advisers and are subject to the Advisers Act. Part II discusses additional Advisers Act issues such as suitability, fees, and advertising. It also briefly reviews issues arising under the Securities Exchange Act of 1934 (“Exchange Act”) and the Employee Retirement Income Security Act of 1974 (“ERISA”). The information provided in Part II assumes that readers have some basic familiarity with Part I.

To provide an overview of the US Securities and Exchange Commission’s (SEC’s) recently proposed rulemaking package relating to standards of conduct for investment professionals. The three proposals included: interpretation regarding the standard of conduct of investment advisers under the Investment Advisers Act of 1940; Form CRS which both registered investment advisers and registered broker-dealers would have to provide to retail investors; and proposed regulation best interest.

Reviews and summarizes the three individual proposals.

The SEC has proposed this rulemaking package in order to meet three goals: enhance retail investor protection and decision making, preserve investor choice and cost, and raise retail investor awareness of whether they are doing business with a registered financial professional. The SEC is looking for feedback, particularly from retail investors, on whether these proposals would achieve the SEC’s goals.

Summarizes the three proposals in a manner that provides insight into how investment advisers and broker-dealers would be required to conduct business with retail investors if the proposals are adopted in the current form.

In June of 2004, the Securities and Exchange Commission (“the SEC”) voted to publish Proposed Regulation B (“Regulation B”), which will implement provisions of the Gramm‐Leach‐Blily Act of 1999 (“GLBA”) that identify activities which banks may engage in without registering as brokers or dealers under The Securities and Exchange Act of 1934 (“The Exchange Act”); effectively governing the manner in which banks, savings associations and savings banks effect securities transactions. By enacting the GLBA, Congress repealed most of the remaining vestiges of the ownership restrictions that prevented banks, securities and insurance firms from combining, thereby allowing them to adopt the universal banking model through the creation of financial conglomerates known as “financial holding companies.” Proposed Regulation B (“Regulation B”) supercedes the SEC's final interim rules issued in May of 2001 with respect to banking and brokering activities. In general, banks and their regulators have found Regulation B to be far more acceptable than the final interim rules of 2001. On a practical level, Regulation B results in considerably more work for banks. This article will examine the existing law as it pertains to banks engaging in broker‐dealer activities and highlight the key provisions of Regulation B.