Washington - U.S. Senators Robert Menendez (D-NJ) and Daniel Akaka (D-HI) today said that they plan to offer the "Honest Broker Amendment" to the Wall Street reform bill, which would require brokers to act in the best interests of their clients and fully disclose any conflicts of interest. Text of amendment: http://menendez.senate.gov/imo/media/doc/20100429HonestBroker.pdf.
The Senators said that the Securities and Exchange Commission case against Goldman Sachs and this week's Senate Special Committee on Investigations hearing highlighted the vital need for brokers to be held to a fiduciary duty standard. The Goldman Sachs case involves brokers not acting in their clients' best interests by selling them bad investments to make more money. The senators say it is clear the standards need to be universal so that they include retail investors as well.
Senator Menendez said: "The evidence in the Goldman Sachs case shows that not only can ill-intentioned investment professionals at all levels gamble with your money, they can actively sell you a bad deal to line their own pockets. The rules that ensure investment professionals are looking out for their clients should be universal. It's not just about seasoned investors, it should also be about average consumers who use a broker to invest their hard earned money. We intend to offer our 'Honest Broker Amendment' now that the obstruction of Wall Street reform is over, and we believe that the evidence in the Goldman Sachs case gives us momentum."
Senator Akaka said: "We must impose a fiduciary duty on brokers to ensure that all financial professionals, whether they are an investment advisor or a broker, have the same responsibility to act in the best interests of their clients."
October 27, 2020