Making a Mockery of Financial Reform
According to a recent New York Times report, the very same people that allowed investors to be exploited over the past decade at the SEC are being rehired by Wall Street to carve out loopholes in the Dodd-Frank financial industry reform bill. It’s what’s known as the “revolving door.”
Their objective is to water down the approximately 243 financial rules and 150 “studies” the bill calls for. Of course, this comes after the devastating influence Wall Street lobbyists have had on shaping the bill from its inception. It’s a one-two, knockout punch for investors.
A “fiduciary duty” standard for brokers probably doesn’t stand a chance even though its the one Dodd-Frank provision that affects nearly every investor. Dodd-Frank calls for the SEC to “study” what effect a broad application of the fiduciary standard for brokers would have. You can bet Wall Street lobbyists will work their former colleagues behind the scenes so that the new standard will only be applied in special circumstances, making it effectively meaningless.
The battle between financial regulators and Wall Street over Dodd-Frank will be a David versus Goliath story. Unfortunately, because of the revolving door, Goliath is getting bigger every day.
Jacob ("Jake") H. Zamansky is one of the country’s foremost authorities on securities arbitration law, the legal recourse for investors claiming broker wrongdoing, or for brokers claiming wrongful termination or other misconduct by their employer. Zamansky & Associates, the New York-based law firm he founded, represents both individuals and institutions in complex securities, hedge fund, and employment arbitrations.
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