HCBA Lawyer Magazine Vol. 29, No. 2 | Page 52

the eVolVing fiduCiary standard for Broker-dealers
Securities Section
Chairs: Dominique Heller – Wiand Guerra King, P.A. & Scott Illgenfritz – Johnson, Pope, Bokor, Ruppel & Burns, LLP
A
dopted by the
Department of Labor
in 2016, the “Fiduciary
Rule” attempted to
extend a fiduciary standard to
registered representatives handling
ERISA plans and IRAs. Among
other things, the Fiduciary Rule
would have prevented registered
representatives from earning
commissions unless they agreed to
50
a “best interest”
contract with
clients that
limited
compensation
and required
various conflict
disclosures.
Unsurprisingly,
the rule had
negative market
consequences.
it remains to be seen
MetLife, AIG,
whether regulation
and Merrill
Lynch
Best interest will
withdrew
be adopted with or
from certain
segments of
without modification.
the market,
while experts
theorized that
smaller, independent broker-dealers
© Can Stock Photo / filmfoto
and RIA firms
were forced to
close their doors
because of
the significant
financial burden
of compliance.
Less than two
years after going
into effect, the
Fiduciary Rule
was vacated by
the United States
Court of Appeals
for the Fifth
Circuit in a
2-1 decision
in Chamber of
Commerce of the
United States v.
Continued on page 51
NOV - DEC 2018
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HCBA LAWYER