The SEC’s Misguided Concept of Fiduciary

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The SEC staff thinks that fiduciary care is irrelevant. It has no more value to consumers investing retirement funds than it does when they buy clothes.

The March 30 SEC staff opinion left no plausible or meaningful way for advisors to tell investors the truth about their fiduciary status on the SEC form CRS.

That opinion was stunning. It ignored the 59 years of law and practice since the Supreme Court held in 1963 the fiduciary standard is the bedrock of the Investment Advisers Act of 1940. The SEC acknowledged this history in its June 2019 guidance for investment advisors.

The staff opinion, instead, focused on a “consistent articulation” of legal obligations using the SEC’s “prescribed statement.” This is why, in the SEC’s staff view, the terms “fiduciary” or “fiduciary duty” may be “extraneous,” “unresponsive” or represent “exaggerated or unsubstantiated claims.” “Fiduciary” is a distraction and would “make it harder for investors to focus on the key information.”