Earlier this week, New Jersey Governor Phil Murphy announced that the New Jersey Bureau of Securities would start rulemaking to "impose a fiduciary duty on all New Jersey investment professionals, requiring them to place their clients' interests above their own when recommending investments." The rule is aimed at reconciling the different standards of care that apply to investment professionals, such as broker-dealers and investment advisers. Addressing the need for this rule, Bureau Chief Christopher Gerold added, "The roles, duties and obligations of investment advisers and broker-dealers are confusing to investors under current federal regulations." New Jersey Attorney General Gurbir S. Grewel also confirmed his office's support for the action stating "With the Trump Administration gutting those [investor and consumer] protections left and right, it falls to states like New Jersey to fill the void".
A formal Notice of Pre-Proposal to solicit public comment will be issued by the Bureau.
Reed Smith will monitor this rulemaking, which addresses an important issue for our broker-dealer and investment adviser clients, especially given judicial action striking down the Department of Labor's Fiduciary Rule in March 2018, as well as the proposal in April 2018 of Regulation Best Interest by the Securities and Exchange Commission. We are available to assist our clients in addressing the New Jersey rulemaking process including submission of responses to the proposed rule.
A link to the State's Press Release from earlier this week is below.
https://www.nj.gov/governor/news/news/562018/approved/20180917c.shtml
This article is presented for informational purposes only and is not intended to constitute legal advice.