Ron Rhoades: SEC Reg BI Is ‘Greatest Securities Fraud in History’
June 25, 2019 by Jane Wollman Rusoff
The Securities and Exchange Commission has committed “the greatest securities fraud in history” by adopting Regulation Best Interest, making BDs “pretend fiduciaries” who think their duty of care can be satisfied by disclosing conflicts of interest, a belief that’s “ludicrous,” fiduciary law expert Ron Rhoades tells ThinkAdvisor in an interview.
The former estate planning attorney argues further that Reg BI “muddies” the difference between investment advisors and BDs by holding both to essentially the same standard: disclosing conflicts of interest. Rhoades is assistant finance professor and director of the financial planning program at Western Kentucky University.
He forecasts a gloomy scenario: Reg BI will result in consumers trusting advisors who aren’t held to a “bona fide” fiduciary duty to act in their best interest, then feel betrayed when they fail to do so, whereupon they’ll pull their money from the market and stop investing altogether. That withdrawal of capital will, in turn, slow U.S. economic growth.
Right now, legal challenges to Reg BI are looming, plus “a battleground” is brewing over what Rhoades calls “group boycotts” BDs are threatening in view of Nevada’s proposed fiduciary rule and, separately, the Certified Financial Planner Board of Standards’ new rules focused on fiduciary, effective this October.
Click HERE to read the full story via ThinkAdvisor.
