By Jay Fishman, J.D. New Jersey is the second state after Nevada to propose a uniform fiduciary standard for broker-dealers and investment advisers. Although pre-proposal commenters advised the New Jersey Securities Bureau to wait on the rulemaking until the SEC adopts its Regulation Best Interest (RBI), the Bureau has decided to go ahead with the proposal because RBI’s proposed standard, while higher than the current broker-dealer suitability standard, is not as high as a fiduciary standard for protecting investors. Moreover, said the Bureau, RBI’s mandating broker-dealers to disclose in writing the conflicts of interests from recommending investments to their customers that might benefit the broker-dealers over the customers will not necessarily prevent the customers from incorrectly investing in the broker-dealer-benefitting recommendations. But the Bureau has promulgated the proposal in response to advice from a Dodd-Frank Act Section 913 study recommending the…
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