Document Type
Article
Abstract
As discussed in this article, the proposed rule change protects bank customers who may be solicited for the purchase of investment products and services, but only to a limited extent. It does not rectify sales practices of broker-dealers--affiliated with financial institutions--which tend to confuse, and even mislead, financially unsophisticated investors of modest means who can least afford to be exposed to excessive risk. Additionally, the proposed rule change adds no meaningful surveillance, inspection, enforcement, or punitive mechanisms to prevent and/or redress insidious practices that are akin to “bait and switch” tactics and are particularly effective against financially unsophisticated investors. In fact, the proposed rule change even rolls back some key regulatory provisions, an especially unsettling retreat when one considers the lack of oversight during the recent market malaise and the contribution that such abridgement may have made to the present economic contraction as a reverse “wealth effect” impinges upon consumer behavior. In short, as demonstrated below, the proposed rule change is inadequate to sufficiently protect investors and promote genuine market integrity.
Recommended Citation
Jill I. Gross & Edward Pekarek, Banks and Brokers and Bricks and Clicks: An Evaluation of FINRA's Proposal to Modify the "Bank Broker-Dealer Rule", 73 Alb. L. Rev. 465 (2010), http://digitalcommons.pace.edu/lawfaculty/741/.