Fiduciary Duty Rule by Scott L. Starr, Partner

Law 360’s Allison Noon recently published an article entitled “Facing Fiduciary Duty, Brokers Threaten to Exit Nevada”.  According to Ms. Noon: “Top stock brokerages are accusing Nevada regulators of playing a dangerous game with fiduciary rules and are threatening to leave the Silver State if officials don’t back off.”

Ms. Noon goes on to report that various Wall Street trade associations and brokers Morgan Stanley, Charles Schwab, Edward Jones, TDAmeritrade, and Wells Fargo “offered ominous promises that investment options would disappear in Nevada if Nevada’s security regulators adopted the fiduciary standard.”

This just goes to show how Wall Street does not really care very much about the mom and pop investors who choose to invest their hard earned life savings and retirement plans in various securities products.

That is because the “fiduciary duty rule” that Nevada regulators are wanting to adopt simply states that a broker selling securities in Nevada will have to put his client’s interests above his own.  In other words, in making investment recommendations the broker needs to think more and be motivated by what is in his client’s best interest, as opposed to what is in the best interest of his own pocketbook.  Pretty simple rule isn’t it?  Most people would think that all brokers should put the wellbeing of their customers before their own bank accounts, but if they think that, in many states they would be wrong.

Fortunately for people who buy securities in Indiana, the appellate courts in this state have ruled that a stock broker is in fact a fiduciary to his clients.  Nevertheless, brokerage firms, who once again care more about themselves, than their customers, frequently require their customers to sign arbitration agreements, which means that if the customer has a complaint he can’t sue the broker in court but instead has to go through FINRA arbitration, where the Wall Street attorneys will once again argue that the arbitrators can ignore the fiduciary duty standards laid down by the Indiana Court of Appeals and instead apply the more lax and lenient “suitability” standard.  Sometimes arbitrators buy such rubbish, but most don’t.  Nevertheless, this shows how Wall Street wants to keep the deck stacked in its favor.

If you or a loved one are the victim of securities fraud, have been lied to, or have lost your hard earned money in what your broker represented was a “safe” investment, call Starr Austen & Miller for a free, no obligation consultation.  Starr Austen & Miller has represented over a thousand victims of securities fraud and knows how to protect your rights.