Fiduciary Duties in Financial Regulation

29 Pages Posted: 4 May 2018 Last revised: 3 Aug 2018

See all articles by Howell E. Jackson

Howell E. Jackson

Harvard Law School

Talia B. Gillis

Harvard University, Law School

Date Written: April 17, 2018

Abstract

This chapter explores the application of fiduciary duties to regulated financial firms and financial services. At first blush, the need for such a chapter might strike some as surprising in that fiduciary duties and systems of financial regulation can be conceptualized as governing distinctive and non-overlapping spheres: Fiduciary duties police private activity through open-ended, judicially defined standards imposed on an ex post basis, whereas financial regulations set largely mandatory, ex ante obligations for regulated entities under supervisory systems established in legislation and implemented through expert administrative agencies. Yet, as we document in this chapter, fiduciary duties often do overlap with systems of financial regulation. In many regulatory contexts, fiduciary duties arise as a complement to, or sometimes substitute for, other mechanisms of financial regulation. Moreover, the interactions between fiduciary duties and systems of financial regulation generate a host of recurring and challenging interpretative issues.

Our motivation in writing this chapter is to explore the reasons why fiduciary duties arise so frequently in the field of financial regulation, and then to provide a structured account of how the principles of fiduciary duties interact with the more rule-based legal requirements that characterize financial regulation. As grist for this undertaking we focus on a set of roughly two dozen judicial decisions and administrative rulings to illustrate our claims.

Keywords: fiduciary duties, fiduciary law, financial regulation, broker-dealer, banking, insurance, securities, ERISA, agency, disclosure, codification

Suggested Citation

Jackson, Howell Edmunds and Gillis, Talia B., Fiduciary Duties in Financial Regulation (April 17, 2018). Harvard Public Law Working Paper No. 18-24. Available at SSRN: https://ssrn.com/abstract=3149577 or http://dx.doi.org/10.2139/ssrn.3149577

Howell Edmunds Jackson

Harvard Law School ( email )

Griswald 402
1563 Massachusetts Avenue
Cambridge, MA 02138
United States
617-495-5466 (Phone)
617-495-5156 (Fax)

Talia B. Gillis (Contact Author)

Harvard University, Law School ( email )

1563 Massachusetts Avenue
Cambridge, MA 02138
United States

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