Posts filed under “Legal”

The Fiduciary Standard is Coming!

In 2011, the Securities and Exchange Commission published a study, mandated by the Dodd-Frank Act, which concluded that all financial advisers and stock brokers should be placed under “a uniform fiduciary standard.” Basically this meant that brokers and advisers would have an obligation to put the interests of clients first and must disclose any conflicts of interest that might compromise that duty.

Wall Street was none too happy about this. The industry spent tens of millions of dollars lobbying to prevent this standard from becoming the law of the land. Indeed, of all the regulatory reforms that have come out of Dodd-Frank, nothing seems to displease the financial industry more than the proposed fiduciary rules.

Although other reforms may be inconvenient and clunky, the proposed rules probably would cut Wall Street’s fees, potentially by a lot. This is a radical change from the current rules, which allow a universe of products, costs and behaviors that history teaches us are contrary to the client’s best interest.

The jousting over standards comes amid the awful results that investors have had in their tax-deferred retirement accounts. As too many studies have confirmed (see this and this), the typical 401(k) or individual retirement account investor barely earns 2 percent a year on their savings. In the years since the Employee Retirement Income Security Act (Erisa) rules went into effect in the 1970s, the average portfolio with a 60-40 split of stocks and bonds should have returned almost four times that much.

Although poor investor decisions are part of the problem — chasing hot money managers, jumping in and out of funds, trying to time the market — high fees associated with conflicted advice have also been a persistent drag on returns.

Continues here: Imagine: Brokers Who Work for Investors

 

 

 

Category: Investing, Legal, Regulation

Ripping Off Uncle Sam

Source: Bloomberg

Category: Digital Media, Legal, Taxes and Policy

More Economic & Legal Details on Indiana’s RFRA Law

This morning, I described the potential economic cost of the backlash Indiana’s RFRA law. There was some pushback, but emailers were quickly disabused of the falsity of their statements. A few factual clarifications and a few last details will round out what some people may not understand. First, the Indiana legislation is different from other “Religious Freedom” laws. The language…Read More

Category: Legal, Really, really bad calls

Gay Discrimination Is A Billion Dollar Self-Indulgence

By now, you have surely heard about Indiana’s so-called Religious Freedom Restoration Act and its potential for giving cover to those who discriminate against gay people. A backlash that had already been gathering momentum burst open this weekend, driven by an op-ed by Apple Chief Executive Officer Tim Cook in the Washington Post. As Cook wrote:…Read More

Category: Legal, Politics, Really, really bad calls, Taxes and Policy

Indiana’s SB-01– Is Not Pro Religion, Its Anti-Gay

Governor Mike Pence is lying about the purpose of this law. The photo below, and who the governor invited to its being signed into law, very much reveals the motivation behind SB101 — its not pro-religion, its anti-gay, and thats wrong. Its also bad business — companies like Apple and Angies List may very well…Read More

Category: Legal, Really, really bad calls

Blurred Lines vs. Got to Give it Up

Check out the two songs side by side: Their are some sonic, but not melodic, similarities: Its a bum jury decision . . .

Category: Friday Night Jazz, Legal, Music

Swiss Leaks

Source: WonkBlog

Category: Finance, Legal

AQR & Cliff Asness’ Disclosure

Later this week, I am interviewing Cliff Asness for Masters in Business. While doing some prep work for the show, I came across this delight: The Cliff Asness Disclosure document:   Cliff Asness Disclosure: The views and opinions expressed herein are those of the author and do not necessarily reflect the views of AQR Capital Management,…Read More

Category: Hedge Funds, Humor, Legal

Pharmaceutical Companies’ Marketing to Doctors

Pharmaceutical companies spend billions of dollars marketing drugs to doctors. We have a few issues with that.

Last Week Tonight with John Oliver: Marketing to Doctors

Source: HBO

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Category: Legal, Really, really bad calls, Video

RadioShack’s Strategic Confusion

    Source: WSJ

Category: Digital Media, Legal, Retail