Are Existing Stock Broker Standards Sufficient? Principles, Rules and Fiduciary Duties

Abstract:     
In recent years there has been concern as to the adequacy of broker-dealer regulation. SEC and self regulatory organization rulemaking addresses specific types of broker-dealer conduct but by and large the regulation has been based on principles and standards rather than voluminous detailed rules specifying prohibited conduct. In particular, a good deal of broker-dealer conduct is addressed under the umbrella of regulating according to fair and just principles of trade. Also, much of the SEC’s rulemaking authority is based on the ability to prohibit fraudulent, manipulative, and deceptive devices. It also has been suggested that broker-dealers should be subject to fiduciary duties but to a large extent, they already are. This article examines the extent to which principles-based regulation or the setting of general standards should be further supplemented by rulemaking addressing specific types of conduct.

Number of Pages in PDF File: 54

Keywords: Administrative Law, Broker-Dealers, Business Law, Fiduciary Duties, Financial Regulation, Securities Regulation

Accepted Paper Series