New Jersey Solicits Comments on Its Preliminary Fiduciary Rule
November 1, 2018 by Bernice Napach
New Jersey is moving ahead with a proposed state fiduciary rule that would affect all broker-dealers, agents, investment advisers and investment adviser representatives registered to do business in the state.
After Gov. Phil Murphy announced his intent for the state to develop “the strongest investor protections in the nation” last month, the state’s Bureau of Securities issued what it calls a preproposal for a fiduciary rule, asking for public comment.
The bureau is “considering making it a dishonest or unethical business practice” for broker-dealers and other investment professionals to not act as fiduciaries when recommending to clients “an investment strategy, or the purchase, sale or exchange of any security or securities, or providing investment advisory services to a customer,” according to the preproposal.
It recounts the failed Labor Department fiduciary proposal, which was shot down by a federal appeals court, and the SEC’s proposed best-interest regulation, which has not yet been finalized, noting that “investors remain without adequate protection from broker-dealers, who under the suitability standard are permitted to consider their own interests ahead of their client’s interest.”
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