Download this Paper Open PDF in Browser

The Fragmented Regulation of Investment Advice: A Call for Harmonization

Michigan Business and Entrepreneurial Law Review, Vol. 4, No. 1, 2015

48 Pages Posted: 8 Feb 2015 Last revised: 18 Aug 2016

Christine Lazaro

St. John's University - School of Law

Benjamin P. Edwards

University of Nevada, William S. Boyd School of Law

Date Written: March 3, 2015

Abstract

Articles on investment advice have largely focused on two categories of individuals – investment advisers and brokers. Our article takes a unique focus by arguing that harmonizing the regulation of investment advice must necessarily include insurance producers as well. We argue that the regulation of all investment advice given to retail investors must be harmonized, which can only be done by the adoption of a new Investment Advice Act.

To support our argument, we first trace the history of the regulation of investment advisers, brokers and insurance producers and explore the varying standards that apply to the advice each individual gives to retail investors. Next, we focus on one investment product specifically, equity-indexed annuities, which has blurred the lines between securities and insurance. This product highlights the issues inherent in the current fragmented regulatory structure.

Next, we propose a solution in the form of an Investment Advice Act, which would replace the fragmented federal regime governing investment advisers and brokers. It would also create new a level of federal regulation to govern investment advice by insurance producers. We lay out the general parameters of the Act, and discuss the scope of conduct such an Act should regulate.

Keywords: Securities, Investment Advice, Insurance, Annuities, Fiduciary Duty

Suggested Citation

Lazaro, Christine and Edwards, Benjamin P., The Fragmented Regulation of Investment Advice: A Call for Harmonization (March 3, 2015). Michigan Business and Entrepreneurial Law Review, Vol. 4, No. 1, 2015. Available at SSRN: https://ssrn.com/abstract=2561567

Christine Lazaro (Contact Author)

St. John's University - School of Law ( email )

8000 Utopia Parkway
Jamaica, NY 11439
United States

Benjamin Edwards

University of Nevada, William S. Boyd School of Law ( email )

4505 South Maryland Parkway
Box 451003
Las Vegas, NV 89154
United States

Paper statistics

Downloads
169
Rank
151,033
Abstract Views
794