SEC Fiduciary Report Is a ‘Bold Blueprint’

of loyalty was a central theme in the Court's opinion in its discussion of the inherent challenges to advisers' rendering objective advice and overcoming conflicts of interest.

The Court reviewed the legislative history of the Investment Advisers Act, and noted that because of "what happened in this country in the 1920s and 1930s" it is essential that "the highest ethical standards prevail in every facet of the securities industry." Critically, the Court also quoted an SEC report, authorized by Congress in 1935 and which addressed investment advisory services.  The Court explained:

"The report reflects the attitude – shared by investment advisers and the Commission – that investment advisers could not "completely perform their basic function – furnishing to clients on a personal basis competent, unbiased, and continuous advice regarding the sound management of their investments – unless all conflicts of interest between the investment counsel and the client were removed. 16"      

The U. S. Supreme Court in Capital Gains used clear and concise language to articulate the intent of the Investment Advisers Act of 1940, an "intent" that in no small part seems influenced by the SEC itself. The intent of the Investment Advisers Act appears on the mind's of the SEC staff authors of the January 22 report to Congress.

SEC Commissioner Elisse Walter (left) has forcefully and passionately articulated the importance of a uniform standard, and that her Aunt Millie "regardless of the title held by the person sitting across the desk from her…. will receive an appropriate and comparable level of protection."

As the SEC proceeds with rule-making, the standard against which a uniform fiduciary standard should be measured, and how well the uniform standard provides equal protection under the law, should be the Investment Advisers Act standard articulated by the Supreme Court.