On October 15, 2018, the New Jersey Bureau of Securities issued a notice soliciting comments regarding amendments to its rules to require broker-dealers, agents, investment advisers, and investment adviser representatives to be subject to a fiduciary duty that expanding dishonest or unethical business practices for failing to act in accordance with a fiduciary duty when recommending to a customer, an investment strategy, or the purchase, sale, or exchange of any security or securities, or providing investment advisory services to a customer. With the reversal of the Department of Labor Fiduciary Rule by the United States Court of Appeals for the Fifth Circuit and the recent SEC proposed “Regulation Best Interest” that the Bureau does not adequately protect customers, the Bureau’s action is next step in creating greater accountability of investment professionals to their customers. The Bureau seeks comments on the legal and factual bases for applying a fiduciary standard to all financial professionals; the scope of the duty in terms of duration and when it arises; the types of recommendations that would trigger in terms of duty; and the scope of the duty in terms of recommendations that would trigger the duty, and the scope of the duty in terms of to whom it is owed. Several public hearing will be held in November 2018 when the public can present comments to the Bureau in its rule-making process.
William Despo is the Chair of the N.J. Bar Association Securities Committee and has spoken and written on legal developments in the investment community. Should you like additional information, you may contact Bill at Bill@WDespoLaw.com.