Abstract

http://ssrn.com/abstract=1579719
 
 

Footnotes (39)



 


 



How to Improve Retail Investor Protection After the Dodd-Frank Wall Street Reform and Consumer Protection Act


Barbara Black


University of Cincinnati - College of Law

August 2, 2010

University of Cincinnati Public Law Research Paper No. 10-24
University of Pennsylvania Journal of Business Law, Vol. 13, No. 59, 2010

Abstract:     
The Dodd-Frank Wall Street Reform and Consumer Protection Act gives the Securities and Exchange Commission the authority to deal with two issues especially important to retail investors. First, section 913 requires the SEC to conduct a six-month study on the effectiveness of existing standards of care for broker-dealers and investment advisers and specifically authorizes the SEC to establish a fiduciary duty for brokers and dealers. Second, section 921 grants the SEC the authority to prohibit the use of predispute arbitration agreements that would require investors to arbitrate future disputes arising under the federal securities laws and regulations or the rules of a self-regulatory organization.

What has been overlooked in the debate over retail investor protection is the interconnectedness of these two provisions. Debate over retail investor protection after Dodd-Frank must consider these two issues together in order to achieve the goal of better retail investor protection. I make three principal arguments:

First, I argue that broker-dealers and investment advisers should be held to standards of care and competence based on professionalism, rather than fiduciary duty.

Second, I propose, for adoption by the SEC, federal professional standards of competence and care for broker-dealers and investment advisers.

Third, I argue that SEC adoption of standards of care will not create any additional federal remedies for investors because it is unlikely that the U.S. Supreme Court will create a private damages remedy for their breach. If the SEC prohibits mandatory securities arbitration of claims based on federal securities law and SEC and SRO rules, the ability of retail investors, particularly those with small claims, to recover damages for careless and incompetent investment advice may be substantially reduced.

Number of Pages in PDF File: 48

Keywords: Broker-Dealer, Investment Adviser, Securities Arbitration, Financial Regulatory Reform, Fiduciary Duty

JEL Classification: G24, G28, K22

working papers series


Download This Paper

Date posted: March 29, 2010 ; Last revised: March 2, 2011

Suggested Citation

Black, Barbara, How to Improve Retail Investor Protection After the Dodd-Frank Wall Street Reform and Consumer Protection Act (August 2, 2010). University of Cincinnati Public Law Research Paper No. 10-24. Available at SSRN: http://ssrn.com/abstract=1579719 or http://dx.doi.org/10.2139/ssrn.1579719

Contact Information

Barbara Black (Contact Author)
University of Cincinnati - College of Law ( email )
P.O. Box 210040
Cincinnati, OH 45221-0040
United States
Feedback to SSRN


Paper statistics
Abstract Views: 4,794
Downloads: 748
Download Rank: 17,291
Footnotes:  39
People who downloaded this paper also downloaded:
1. Consumer Protection in the United States: An Overview
By Spencer Waller, Jillian Brady, ...

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.250 seconds