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Articles Tagged with Fiduciary Duty

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Stockbroker-Misconduct-1-300x150-300x150The Securities Industry and Financial Markets Association has stated that in 2019, it plans to keep pressure on state officials who consider following Nevada in imposing a higher standard of care on broker-dealers. Leaders of the organization said that after praising a federal proposal that has been in the making for decades, SIFMA is committed to heading off state efforts that could overlap with the proposal, known as the Regulation Best Interest.

For years, the industry has disagreed about how to ensure that broker-dealers and investment advisers act in their clients’ best interests when recommending investments. In April, the U.S. Securities and Exchange Commission introduced Regulation BI, which is a proposal that would put checks on brokers and advisers.

“We would hope that states will pause, let the SEC act and then figure out how that’s going to protect their constituents within their states,” SIFMA’s president and CEO, Kenneth Bentsen said. “It is an issue of high interest to us and something we’ve been very involved in.”

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When you purchase insurance from a broker, investment advisor or insurance agent, shouldn’t they have your best interests at heart?

Proposed-Fiduciary-Duty-Rule-Poised-to-Pass-Leaves-Brokers-Seething-300x199New York’s Regulation 187 was designed to do just that, and could take effect as early as August of 2019. In it, agents and brokers are required to have the “best interest” of the consumer in mind when offering recommendations for their life insurance policies and annuities. Agents and brokers are not to consider any financial incentives or compensation that they might receive as a result of the financial products they offer while discussing different options for annuities and policies.

While Regulation 187 is intended to supplement New York’s existing consumer protection laws and “fill in the gaps” of regulations, it isn’t being met with resounding applause by Wall Street. According to one trade industry group, a number of issues exist with the new law that can be problematic.

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What is the duty of a fiduciary? A recent case involving a broker-dealer firm in Puerto Rico is raising the issue

According to the Uniform Securities Act of Puerto Rico, broker-dealers and investment advisors in the commonwealth “must observe the highest standards of fiduciary duty toward their customers and clients.” But not all firms seem to adhere to this rule. Case in point is, potentially, Oriental Financial Services.

Based in San Juan, Oriental Financial recently sent a letter to one of its customers regarding an arbitration claim filed earlier this year with the Financial Industry Regulatory Authority (FINRA). Essentially a break-up letter from president Sean Miles, it informed the client that Oriental and “its agents, employees, parent and affiliates withdraw and disclaim any and all investment advice with regard to your accounts, including but not limited to the Puerto Rico securities.”

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