Donohue Pens Article About Broker-Dealer Conflicts

On March 10, Fund Board Views published MFDF Chair Buddy Donohue’s second article in his conflicts of interest series, addressing broker-dealer conflicts. The article underscores the complexity in addressing conflicts in the broker-dealer space due to the vast array of products and services available. Broker-dealers may act as underwriters, dealers, or advisers, and each role can present conflicts between the firm’s goals and the customer’s best interest. Donohue notes that broker-dealer incentives may not fully align with customer needs, particularly when the broker-dealer is acting as a principal in a transaction. The article reviews Reg BI’s requirements that firms adopt and maintain policies that mitigate conflicts and highlights FINRA’s 2013 Conflicts of Interest report which provided a summary of conflicts reported by brokerage firms and addressed firm approaches to managing certain conflicts.

Click here to read Buddy Donohue’s Fund Board Views article about conflicts of interest relating to securities broker-dealers.