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When broker ethics break down

Many of our Lexington readers no doubt recall news not long ago about giant stock broker JPMorgan. It has been alleged that some of its clients were coaxed and pushed into investing in some expensive funds that turned out to perform below expectations. By itself, that's hardly newsworthy. The story made headlines, however, when it was revealed that the underperforming, costly stocks were owned by none other than JPMorgan.

The bank says the conflicts of interest were unintentional oversights. Morgan brokers say they were pressured to push the company-owned stocks. MarketWatch notes that if the Department of Labor adopts a fiduciary standard it is currently considering, brokers would be required to disclose in clear, plain terms any conflicts of interest and would also be compelled to show clients that less costly alternative purchases are available.


MarketWatch says the fiduciary standard would go a long way to reducing this type of conflicted wheeling and dealing. Right now, brokers have little reason to point out alternatives to the products they're pushing -- and little incentive to disclose conflicts of interest.

Under a fiduciary standard, these blatant conflicts of interests would be much more than ethically questionable: they would be illegal.

So what's stopping the enactment of such a standard? Simple. Wall Street stands foursquare in its path. It has fought a fiduciary rule with everything it has, MarketWatch notes, and that fact alone "should tell you something."


Investors who have been subject to securities fraud can speak with attorneys with Wall Street backgrounds and roots deep in Central Kentucky. Broker misconduct can be legally addressed by knowledgeable lawyers who know how to fight to get your money returned to you.

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