You've probably heard about the insider-trading probe going on here in the Northeast, in which several hedge funds have been investigated by the SEC over charges that they'd sought out nonpublic information from employees at publicly held companies and used that to buy and sell stocks. More than a dozen people have been charged so far, and one - a former executive with Connecticut's SAC Capital Advisers - has pleaded guilty. Attorney General Eric Holder has confirmed that the Justice Department is part of the investigation.
One bit of fallout from all this could be a renewed focus on an upcoming meeting between the SEC and the Committee for the Fiduciary Standard. As part of last summer's financial regulation bill, the SEC was mandated to study the fiduciary rules, which state that an investment advisor must always place the client's needs first and foremost. Wealth managers such as myself uphold that fiduciary standard, but they don't apply to some investment professionals, such as brokers.
"I think this will remind everyone in the regulatory and legislative arms that the only protection the public is going to have is by making those who are providing the advice personally responsible," said Harold Evensky, a financial advisor who's on the Committee for the Fiduciary Standard. His group meets with the SEC on December 8th. Will heightened concern about the propriety of hedge funds lead to tightened fiduciary standards? That could only help the individual investor.
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