Former lawmakers Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.) said in the brief that Reg BI "cannot stand."
The former lawmakers also argued that any new SEC rule "must provide for a uniform fiduciary duty to apply to all broker-dealers and investment advisors. Reg BI "perpetuates the very inconsistency in standards of care that Congress passed the Dodd-Frank Act to fix and violates Dodd-Frank," the brief stated.
Attorney Sean M. Sweeney, head of the securities litigation group at The Securities Lawyers in Milwaukee, said in an interview he agreed with XYPN, Dodd and Frank. “From an investor standpoint it has been very frustrating over the years that there is no consistent standard across the industry," he said. "In our cases, Finra arbitrators have to decide whether a standard of care has been breached and having multiple and muddled standards applying to different contexts makes it very challenging for both the industry and investors to know what is expected."
“Every client I have ever represented thought that their broker was supposed to put their interests ahead of the broker’s. Broker-dealers advertise their services on a platform of trust and duty, and so I think applying that fiduciary standard across the industry is appropriate, and not really a change to what investors already think they are getting,” Sweeney added.
The 2nd Circuit Court is expected to reach a decision before Reg BI is implemented June 30.