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Morgan Stanley might stop offering services due to proposed Nevada broker rule


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Morgan Stanley might stop offering services due to proposed Nevada broker rule

Morgan Stanley said it may stop offering brokerage services in Nevada due to its proposed new fiduciary standards for brokers, InvestmentNews reported March 13.

The proposed rule, filed Jan. 18, provides various cases wherein brokers could breach their fiduciary duties, such as failing to perform due diligence on an investment strategy, recommending investments not in the client's best interests, not explaining all the risks involved, failing to disclose information regarding a potential conflict of interest, failing to provide documents for a product prior to its execution, putting interests of the firm ahead of clients', charging unreasonable fees and violating FINRA and self-regulatory organization rules.

Nevada's Office of the Secretary of State is inviting public comment on the proposal.

Morgan Stanley, in a March 1 letter, said that while it supports "strong conduct standards for broker-dealers and investment advisers that will protect investors," the rule as it stands will limit the cost-effective brokerage services it can provide. If there is no substantial revision, the company said it will not be able to provide these services to Nevada residents, according to InvestmentNews.

Firms such as Wells Fargo & Co., Charles Schwab & Co. Inc., Edward D. Jones & Co. LP and TD Ameritrade Holding Corp. also said they might cut back on the services they can provide under the current rule, according to the report.

The Securities and Exchange Commission could release its final rule by early summer, according to InvestmentNews. The SEC in April 2018 rolled out its best interest standard proposal, which places various rules on brokers/dealers when dealing with clients.