A lobbying campaign by the securities industry threatens to water down a U.S. financial reform measure that was supposed to protect American states, towns and cities from being taken for a ride by financial advisors.
One of the main
ideas of the 2010 Dodd-Frank law was to defend the finances of U.S.
local issuers, which have often been hit by fraud and bid-rigging or
simply hurt by bad advice. The solution was to impose a fiduciary duty on financial advisers to make sure they protect the interests of town halls and state capitols around the nation.
But the
Republican-controlled House of Representatives passed a bill in
September that would exempt so many people from the definition that it
could create large loopholes.
While the measure, which is backed by the Securities Industry and Financial Markets Association, may not get approval in the Senate, it could put pressure on the U.S. Securities and Exchange Commission, which is still finalizing its definition of a municipal adviser.
The SEC
is still mulling its definition. "Staff are analyzing the public
comments and no final decisions have been made," SEC spokesman John
Nester said.
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