The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires the Securities and Exchange Commission (“SEC”) to conduct a study of legal and regulatory requirements applicable to broker-dealers, investment advisers, and associated persons who provide personalized investment advice and recommendations about securities to retail customers. The Dodd-Frank Act also amends the Securities Exchange Act of 1934 and Investment Advisers Act of 1940 to expressly permit the SEC to adopt rules that provide a standard of conduct for broker-dealers and investment advisers when they provide personalized investment advice to retail customers. The SEC has generally indicated that it intends to propose such rules and to do so on timetable that has concerned some industry participants given the gravity of the issues involved and possible unintended consequences. However, SEC Chairman Mary Schapiro recently suggested that the SEC will now seek additional public comment before proposing such a rule.
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