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Wealth Professional | 06 May 2015, 03:11 PM Agree 0
The MFDA has issued both an ban and a fine for the kind of conflict of interest case sparking calls for fiduciary standard.
  • Peter | 06 May 2015, 03:38 PM Agree 0
    I would like to know where are the Dealers and Branch Managers who are supposed to do compliance on every single transaction and why are they not being fined and reprimanded?
    I have seen a handful of Bank owned firms get a slap on the wrist for non-compliance or lack of proper supervision of their advisors.
  • Mike Paugh CFP, CDFA | 06 May 2015, 04:19 PM Agree 0
    So wouldn't Armstrong & Quaile Associates Inc have some explaining to do about not knowing about his Outside Business Activities?

    Those of us who are CFPs already have to meet the standard of putting your clients' interests first. So by all means bring on the standard. But rules only work for people that follow them and this guy already didn't have permission to refer and clearly wasn't disclosing the conflicts of interest he was supposed to. So how would a higher standard, put in place by a SRO that can't recover clients money through fines anyway, make a difference?
  • Harley Lockhart CLU CHFC | 06 May 2015, 04:41 PM Agree 0
    "Swerdelian did not have permission to enter referral arrangements..."
    "The former MFDA player also failed to ensure that the investment strategies he recommended were suitable for the clients and failed to make sure his clients could afford the costs associated with the loans"

    This individual was operating outside existing regulatory rules. Why would anyone think that a legislated fiduciary standard would have had any effect on him?
  • Peter | 07 May 2015, 08:19 PM Agree 0
    Harley, that is exactly my point. Honest, ethical advisors who have been in this business for 25+ years are being complianced to death, while these individuals don't have respect for compliance or the regulations under which they must conduct their business.
  • Mark | 17 Mar 2016, 05:29 PM Agree 0
    As a former adviser I understand the potential for conflict of interest. Certainly no amount of legislation is going to dissuade any selfish and corrupt adviser(s) from committing any number of illegal and/or unethical acts for the sole purpose of selfish financial gain. This issue is the same for anything having to do with money and also includes banks, insurance companies and any independent brokerage for investment, accounting, law, insurance or mortgage products or services to name a few inter-related businesses and sales or advisory practises. Self Regulatory Organizations (SRO) are a joke because they always pretend to protect the public, but the reality is that they only protect their own organizations and its participants most of the time. Too much time and money gets wasted as a result and even when the investment or advice client's complaint is legitimate because it is supported by facts there is no guarantee of any compensation for the losses suffered. We live in a world where there are no guarantee in reality and while regulation may help it does not guarantee the reduction or avoidance of corruption, fraud, deceit or outright intentional lies on the part of the adviser, broker, institution or client. And, even if the adviser were to be compliant with all regulation this still does not guarantee that any particular investment or investment strategy will be successful since whatever happens in a global economy is beyond any individual's control. It's just like the Prospectus and Offering Memorandum state, "Past performance is no guaranty of future returns". That's also why errors and omissions insurance is mandatory, but even E&O insurance does not always resolve issues to everyone's satisfaction. In the end both the adviser and the client is left to make their best effort in making every financial decision, but that is difficult even in the best of circumstances let alone in cases of intentional misrepresentation the SRO, adviser, broker/dealer, institution, regulators and client. The is no all encompassing solution and so we have a patchwork of regulation, moral persuasion, peer pressure and basic common sense, but the bad apples and uncontrollable possibilities make for a very imperfect world whenever things do not go as anticipated or hoped for in light of many factors that are beyond anybody's control. Perhaps this is why the Latin term, "Caveat emptor" (buyer beware) should always be considered in any kind of financial transaction (right down to every single purchase we make). It's a complicated and unfair world full of chaos and the financial advisory industry is no better than any other industry when it comes to overcoming all the potential issues of conflict of interest.
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