Tomorrow at Boston University I’ll be joining a distinguished group to discuss the Role of Fiduciary Law and Trust in the 21st Century, inspired by the work of Professor Tamar Frankel.
Those who have followed my work will not be surprised that I’m going to focus on the limits of fiduciary duties, and their inappropriate application in such settings as broker-dealer conduct. For some hints, see my previous articles, Are Partners Fiduciaries, Law v. Trust, Federal Misgovernance of Mutual Funds, and Senate testimony on the Goldman case.
This is not only an interesting topic but a hot one. Lawmakers seem to find fiduciary duties an attractive regulatory tool: find something you don’t like, label it “fiduciary,” and throw it over to the courts and litigators. Pursuant to Dodd-Frank, the SEC is currently studying these issues in connection with brokers and dealers. As we saw in the litigation leading up to Jones v. Harris, discussed in my mutual funds article above, the result is often costly chaos. I have some thoughts on dealing with the chaos by focusing on the rationale for and functions of fiduciary duties.