ADISA Continues Efforts on NJ Fiduciary Rule

Dec 17, 2018

To add to its earlier efforts on the NJ Fiduciary Rule, ADISA has joined major financial services trade associations as signatory to a letter to the chief of the New Jersey Bureau of Securities in response to the state’s uniform fiduciary standard pre-proposal. Along with our coalition partners, we highlight within the letter the very problematic aspects of the state’s proposal.
On October 15, 2018, New Jersey’s Bureau of Securities issued the pre-proposal notice as part of its ongoing efforts at establishing a uniform fiduciary standard applicable to all investment advisors and broker-dealers doing business in the state. The notice solicited comments for the purpose of amending Section 13:47A-6.3 of the New Jersey Administrative Code. The proposal states that the bureau “is considering making it a dishonest or unethical business practice for failing to act in accordance with a fiduciary duty when recommending to a customer, an investment strategy, or the purchase, sale, or exchange of any security or securities, or providing investment advisory services to a customer.”
On November 29, 2018, ADISA’s Immediate-Past President, John Grady of DLA Piper LLP, provided comments on the amendment at a hearing conducted by the New Jersey Division of Consumer Affairs and its Bureau of Securities in Newark, New Jersey. ADISA further submitted a letter (drafted by John Grady and ADISA Executive Director John Harrison), to New Jersey’s Division of Consumer Affairs regarding this issue.  To read ADISA’s November letter, click here.
The most recent letter, dated December 14, was co-signed by ADISA, SIFMA, the IPA, Financial Services Institute, Insured Retirement Institute, NAIFA, New Jersey Bankers and ACLI; the letter highlights:

  • The active federal activity in pursuit of an enhanced standard of care for broker-dealers.
  • The significant pre-emption hurdles any state-level fiduciary duty would face.
  • The problematic nature of state-specific fiduciary standards.
The letter also highlighted the major flaws within the now-vacated fiduciary standard adopted by the Department of Labor during the Obama Administration, including the unintended consequences that would have limited financial advice and investment options for millions of Americans. We cautioned the state that these inherent flaws would also affect New Jersey residents should the state adopt a similarly flawed standard.
ADISA, along with its co-signers, strongly urges the New Jersey Bureau of Securities to wait until the SEC’s final rule is released and the nation’s new regulatory landscape is set before pursuing any state-specific activity.
To read the December letter in its entirety, click here