Following the Enron and WorldCom scandals in 2001, public outrage over the lack of executive accountability led to the Sarbanes-Oxley Act of 2002 which required better public disclosure. Wall Street argued that this new disclosure standard would cause publicly traded companies to join foreign exchanges instead of United States based securities exchanges, and that this would in turn jeopardize New York economy and status as the financial capital of the world. History has proven Wall Street wrong.
The economic crisis of 2008 ensued and banking titans Bear Sterns, Merrill Lynch, and Lehman Brothers collapsed. The 2008 credit crisis has shaken retail investors confidence in the financial system and once again demonstrated the need to make sure that Wall Street acts in the best interest of it’s own customers. In the years leading up to the 2008 meltdown, customers were sold investments marketed as safe, secure, and income producing. In truth, customers were sold funds that owned toxic tranches of subprime mortgage backed securities and other byproducts of the real estate boom. Investors placed their trust in their Wall Street brokers and bankers, and relied on the fact that their interests would be placed first. The need for a broad uniform fiduciary standard is essential so that customers can be certain that their interests are protected. The time to implement a uniform fiduciary duty is now.
- The Time for a Uniform Fiduciary Duty Is Now
- St. John’s Law Review, Vol. 87: Iss. 2 & 3, 313 (2013)