Activist States Move Forward with Fiduciary Standards for Broker-Dealers and Investment Advisers

April 03, 2018

Although the U.S. Securities and Exchange Commission (SEC) staff is currently drafting proposed rules relating to the standard of conduct for broker-dealers and investment advisers, several states have decided not to wait for the SEC’s action. Nevada and other states began taking action following the Department of Labor’s (DOL’s) announcement that it had delayed full implementation of the Best Interest Contract Exemption and other aspects of the DOL’s fiduciary rules until July 1, 2019. The state requirements, as with the expected SEC rulemaking, apply to taxable as well as retirement accounts. As discussed below, it is not clear whether the SEC proposed rulemaking to establish a uniform standard of conduct for certain broker-dealers and investment advisers, which we expect to see this quarter, will deter or pre-empt the states from adopting their own rules.

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