The Obama administration's proposed financial regulatory revamp could upend Wall Street brokerages by compelling brokers to put their clients' interests ahead of their own, The Wall Street Journal said on Friday
The overhaul announced Wednesday includes a provision to establish a fiduciary duty for broker-dealers offering investment advice, to help empower the U.S. Securities and Exchange Commission to increase fairness for investors.
Brokers must now simply put clients in suitable investments, not necessarily ones that are less costly or more tax-friendly. Brokers could not ordinarily plow a retiree's investable assets into risky stocks or illiquid investments, for example.
The newspaper said a new fiduciary standard would require brokers to disclose potential conflicts of interest, and could also expose them to more lawsuits.
This is a smart and overdue move, Sallie Krawcheck, who used to run Citigroup Inc's
(Reporting by Jonathan Stempel; editing by John Wallace)