Assessing Litigation, Policy, and Cost Implications of a Unified Fiduciary Duty Standard Under Dodd‐Frank Section 913

Project Leader: Eric Helland

In early 2011 the Securities and Exchange Commission—per requirements mandated by Section 913 of the Dodd‐Frank Wall Street Reform and Consumer Protection Act of 2010—delivered to Congress a study on Investment Advisers and Broker‐Dealers. The study recommends that the SEC replace the current, multi‐tiered regulatory regime, in which investment advisors are fiduciaries to their clients while broker‐dealers are regulated through the SEC's anti‐fraud authority, with a new uniform fiduciary duty for both broker dealers and investment advisors. This research will address two of the issues raised in two commisioners' dissent to the study: 1) whether the differences in regulatory regimes (particularly regarding the fiduciary standard) have any practical consequences in enforcement efforts against investment advisor versus broker dealers; and 2) if there are systematic differences in the nature of enforcement actions against investment advisors, whether these differences result in systematically higher penalties, different injunctions, or follow on civil litigation.