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Monday April 18, 05:04
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Brokers are only brokers and nothing else, SEC said
(by Brigitta Zulfitzler)
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A recent investigation was conducted by the Securities and Exchange Commission on the investors’ ability to distinguish different categories of financial services professionals.
The study commissioned by the agency found out that most of investors are totally confused by the hash of titles that include broker, financial adviser, financial consultant, investment adviser and financial planner.
The main issue appeared with brokerages which say to regulators that their job is to sell securities to their customers, not provide them financial advice, but talking to client they say the extreme opposite.
The main reason for them is to remain being out the strict rules of the Investment Advisers Act of 1940.
The Financial Planning Association demands that brokers should obey to the same rules as its members and sued the SEC to handle this issue.
The SEC adopted a statement sent to brokerages with the requirement of distinguishing their business from that they are not allowed to perform.
"Your account is a brokerage account and not an advisory account," the statement said.
Still, the study group said the SEC failed to reach its main goul. "In general, investors found the statement communicates that differences might exist, but did not do enough to explain those distinctions," the study says.
The commission plans to provide another investigation this year on whether brokers need more regulation to clear up investor confusion.
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