In December, the House of Representatives unleashed --- or tried to --- a new era of financial reform by passing the Consumer Protection Act of 2009. If passed and then signed, it would turn Wall Street as we know it upside down. Why? For one, it would make broker/dealers and their reps fiduciaries.
(It's still not clear to me how you can do that without breaking up the wirehouses, who make lots of dosh doing non-fiduciary activities, such as, proprietary trading, investment banking, syndication and etc.)
What's troubling to me is the legislation being wrestled over would create a new bureaucracy, a Consumer Protection Agency to police the financial services industry. (That would create yet another government agency, a new police force to be fed taxpayer dollars, and would raise the cost of doing business even more. Besides, I thought that was the SEC's job? Oh, and FINRA, what about it?) I think the SEC and FINRA should do their jobs and police the firms --- and they have a much bigger budget to do so now.
Still, fraud is fraud. And a dirty broker or investment advisor rep of an RIA can cheat, if he is clever and super devious, for a period of time. So, I ask, would a new consumer protection agency have prevented this?
From the Daily Weekly website:
"Rhonda Breard made her name in the local investment world by buying ads on TV and going after big clients. Now that her brokerage firm has revoked her license, and state regulators have begun looking more closely at allegations that she bilked her clients, the very visible Breard has disappeared.
"Clients say they sent her checks and got statements in the mail showing their money had been deposited. But now it appears that some of those documents may have been altered or completely falsified. Meaning many may have lost their entire life savings. . . ."