Several industry and trade groups have filed suit in Texas federal court challenging the Department of Labor’s new fiduciary rule that would require financial professionals who advise retirement accounts to act in their “client’s best interest” when recommending investment products. We question why anyone would oppose such an obvious, common sense obligation.
The current standard only requires professionals to promote products that are “suitable” for the investor, rather than in the client’s best interest. Opponents of the new rule argue that the heightened standard would impose unjustifiable costs on small businesses and professionals who must implement it, claiming it is arbitrary and capricious, and contrary to the law. Of course, one could argue that if a company cannot afford to act in its client’s best interest, then that company should not be in business.
According to opponents, the requirements for the new DOL fiduciary rule would violate the First Amendment by restricting advisers’ ability to advise clients and by barring firms from including class action waivers. Opponents also claim that the new rule would subject investment advisors to potentially costly litigation in the future. We believe that investment advisors should be exposed to litigation if they fail to act in their clients’ best interests.
Proponents of the new rule argue that the heightened standard would help protect investors’ retirement accounts by making sure that brokers adhere to products that are in clients’ best interest.
Under the DOL fiduciary rule, brokers would be exempted and may continue to earn commissions from sales of investment products, provided they pledge to act in their client’s best interests going forward. The rules also exempt a broader class of retirement plan sponsors from owing a fiduciary duty to investors.
Call a Los Angeles Stock Fraud Attorney Today
If you suspect your broker has recommended unsuitable investments in your retirement account and you have suffered investment losses as a result, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles stock fraud attorney today for a consultation to discuss your rights and options.