Corporate & Securities Law

The Securities and Exchange Commission has published on its website the long-awaited Rand Corporation report that was to examine differences between brokerage firms and investment advisory firms, and whether or not consumers were confused. 

The 219 page report indeed states, "It is not surprising that the typical retail investor finds it difficult to understand the nature of the business from which he or she receives investment advisory or brokerage services."  The study also identifies concerns, including investors'  unhappiness with disclosure documents.  The study said that today's written disclosures are of little value because few investors read them. 

While the study stayed clear of regulation, it detailed how the brokerage and advisory businesses have become more similar over time and questioned whether traditional distinctions between brokers and advisers make sense. 

It remains to be seen how the SEC responds to the report.  But one thing is certain, a response is needed, and clarification for investors' sake is demanded.