2 thoughts on “US Developments

  1. Very interesting. However the Dodd-Frank act only came in because Bush was stupid enough to bow to pressure and repealed the Glass-Segal act which had been in place I think ,since the great wall street crash. The whole point is to bring some sanity into banking procedure, having said that some legislation is better than none, getting the balance right is the really tricky bit. How anyone would invest in a company totally under the control of founders beats me. I was always told NEVER invest as a minority holder.

  2. The fiduciary principle already applies to those giving investment advice. Its current iteration is in the FCA Handbook,but the principle has been with us in one form or another since the Financial Services Act 1986, possibly earlier under the common law.. There is also a rule against conflict of interest.

    However, only natural persons can sue for breach of the fiduciary “best interests ” rule. This has led to anomalies, most recently in the interest rate swap scandal. Businesses owned by natural persons successfully sued for compensation for the dreadful, self interested advice given by banks to buy these toxic products. Those businesses operated by a company, even if a one man company, lost their cases.

    The rule against conflicts of interest has not been made actionable at all by the FCA, and is thus blatantly disregarded by the banks.

    Robert Morfee

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