Securities Law Commons^™

Defining "Fiduciary": Differences In Fiduciary Standards Within The Securities Industry, Christine Lazaro

Faculty Publications

Investment professionals are subject to varying standards of conduct when providing advice to clients. The standards range from providing advice which is suitable to acting consistently with a fiduciary standard.

The article provides a brief history of the applicable securities statutes governing investment advice. It discusses the differences in the enactment of the Securities Exchange Act of 1934, the Investment Advisers Act of 1940, and the Employee Retirement Income Security Act of 1974.

Next, the article discusses how each statute has impacted the standards applicable to brokers and investment advisers. Investment advisers are deemed fiduciaries. Brokers are held to the …

Major Investor Losses Due To Conflicted Advice: Brokerage Industry Advertising Creates The Illusion Of A Fiduciary Duty, Joseph C. Peiffer, Christine Lazaro

Faculty Publications

(Excerpt)

No national standard exists today requiring brokerage firms to put their clients’ interests first by avoiding making profits from conflicted advice. In the five years since the passage of the Dodd Frank Act, inaction by the Securities and Exchange Commission (SEC) on a fiduciary standard has cost American investors nearly $80 billion, based on estimated losses of $17 billion per year.

Amid encouraging recent signs of possible action from the Department of Labor and the SEC, there is a compelling case to be made for a ban on conflicted advice in order to protect investors. In the absence of …

Fiduciary Duty - Now And In The Future, Christine Lazaro

Faculty Publications

(Excerpt)

The celebrated jurist Benjamin Cardozo opined that the fiduciary duty is “the duty of finest loyalty”, and that a fiduciary “is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.” The question most customers have is whether their broker is subject to this duty of finest loyalty, or if they are bound merely by the morals of the marketplace. Currently this is a very difficult question to answer, and will depend on whether the customer is dealing with a …

Order Flow Cases: Jurisdiction, Preemption And Securities Laws, Richard L. Stone, Francis J. Facciolo

Faculty Publications

(Excerpt)

Primary jurisdiction and preemption issues arise in securities class action litigation when alleged violations of state law arise from conduct that is either explicitly or implicitly regulated by the federal securities laws.

These are two distinct theories: one is a matter of administrative law and judicial economy (primary jurisdiction); the other is a matter of constitutional law involving the Supremacy Clause (preemption). To date, there has not been extensive case law involving preemption and the federal securities laws (other than in the blue sky and tender offer areas) and there has been almost no case law on primary jurisdiction …