{"id":229,"date":"2007-09-20T16:26:32","date_gmt":"2007-09-20T16:26:32","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/2007\/09\/sec_provides_brokerage_firms_w_1"},"modified":"2021-09-20T15:41:20","modified_gmt":"2021-09-20T20:41:20","slug":"sec-provides-brokerage-firms-w-1","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/sec-provides-brokerage-firms-w-1\/","title":{"rendered":"SEC Provides Brokerage Firms with New Loophole to Avoid Breach of Duty to Investors"},"content":{"rendered":"

\t\t\t\tAs discussed in earlier postings, after a court overturned the “Merrill Rule,” which exempted brokerage firms from duties of Investment Advisors Act of 1940, brokerage firms say they will cease “fee based” accounts rather than assume duties to clients mandated my that legislation. However, as predicted, regulators and legislators will instead come to their rescue. <\/p>\n

The Securities and Exchange Commission fought hard to exempt brokerage frims from the advisors act, but lost, and is now busily helping Wall Street with new enforcement loop holes. For example, the SEC has now decided to permit non-discretionary advisory accounts to be exempt from certain principal trading restrictions. A principal trade is an order a broker-dealer executes for its own account rather than one it simply executes in the market for its client.<\/p>\n

Under the new rule, brokerage firms must first provide written notice and obtain blanket consent from these clients. They are then exempt from breach of fiduciary duty for self-serving actions as they profit on sales of securities to these clients sold from the firms’ inventories. <\/p>\n

Continue Reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

As discussed in earlier postings, after a court overturned the “Merrill Rule,” which exempted brokerage firms from duties of Investment Advisors Act of 1940, brokerage firms say they will cease “fee based” accounts rather than assume duties to clients mandated my that legislation. However, as predicted, regulators and legislators will instead come to their rescue. […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3774,3801],"tags":[],"class_list":["post-229","post","type-post","status-publish","format-standard","hentry","category-broker-dealers","category-sec"],"yoast_head":"\nSEC Provides Brokerage Firms with New Loophole to Avoid Breach of Duty to Investors — Investor Lawyers Blog — September 20, 2007<\/title>\n<meta name=\"description\" content=\"As discussed in earlier postings, after a court overturned the "Merrill Rule," which exempted brokerage firms from duties of Investment Advisors Act of — September 20, 2007\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/sec-provides-brokerage-firms-w-1\/\" \/>\n<meta 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