Thursday, 14 March 2019 12:47

State Fiduciary Rules May Be Illegal

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In an eye-opening claim, both RIA and broker advocates are claiming that state level fiduciary rules may be illegal under federal law. Both the Investment Adviser Association (IAA) and SIFMA say that at least for RIAs, Nevada and other states’ fiduciary rules are illegal because of the 1996 National Securities Markets Improvement Act, which prohibits states from imposing additional rules on SEC-regulated advisors. The IAA said “For more than 20 years, federal law has prohibited states from adopting any rules, interpretations, or guidance that would have the effect of substantively regulating SEC-registered advisors. The IAA will engage with policymakers in any state that appears to be moving in that direction”.

FINSUM: A lot of the states’ fiduciary rules don’t just stop at brokers and extend to RIAs and insurance agents. This IAA argument seems like pretty strong grounds for a lawsuit to block any/all of these.

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