SEC may weigh in on investment-advice rule for brokers

Personal Finance


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Understanding alts and their risks may require more homework than most investors are willing to take on.

As it stands now, brokers are required only to make sure an investment is “suitable” for a client. This differs from registered investment advisors, who must serve as fiduciaries — that is, the advice they provide must be in the best interest of the client.

The SEC meeting comes about a month after the Labor Department said it was backing off enforcement of its own investor protection rule due to a court ruling. In that case, a federal appeals court determined the agency had overstepped its authority by creating the rule, parts of which took effect last year.

It remains uncertain whether the Labor Department will challenge the court ruling.

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