ADISA Joins SIFMA-led Coalition in Joint Comment Letter to New Jersey on Proposed Fiduciary Duty of BDs and Investment Advisers

Jun 17, 2019

ADISA joined SIFMA and other major financial services trade associations as signatory to a letter to the New Jersey Bureau of Securities’ request for comments on the state’s draft fiduciary duty regulations. The joint comment letter encourages the Bureau to consider the following as it develops the final regulation:

  1. The Bureau should pause its process and reevaluate its proposal in light of Reg BI.
  2. The duration of the duty should be limited to when a recommendation is made.
  3. The “best of” standard for account types, securities, and transaction-based compensation is impermissibly vague and fails to provide a sufficiently defined standard to put advisors on fair notice of what it requires.
  4. The scope of the proposed fiduciary duty should be limited to recommendations of securities transactions or investments strategies.
  5. The duty of loyalty should: (i) strike the “without regard to …” formulation and use the SEC’s formulation instead; (ii) provide additional guidance on the types of products and compensation that are permissible; and (iii) clarify the disclosure obligation.
  6. The proposal raises pre-emption and other legal concerns.
  7. The proposal must properly account for its economic impact.
  8. The proposal should explicitly limit its application to retail investors who are legal residents of New Jersey or who reside in New Jersey.
  9. The proposal should specify an appropriate future effective date and provide for a sufficient implementation period prior to such date.

You can read the letter in its entirety here.

In addition to the joint letter, ADISA submitted its own letter on Friday and a petition from its members in New Jersey further enforcing the message.  

We welcome ADISA members’ comments and assistance with this effort to make a positive impact on regulation for the industry and the people of New Jersey.