The lawsuit brought againstthe Securities and Exchange Commission by Attorneys General fromseven states and the District of Columbia may prove not to havestanding in federal court, according to one attorney.
In their complaint, the Attorneys General are asking the U.S.District Court for the Southern District of New York to scrubRegulation Best Interest, the SEC's recently passed standard ofcare rule for broker-dealer recommendations to retailinvestors.
Their complaint alleges that the SEC acted outside theinstructions of Congress established in the Dodd-Frank Wall StreetReform and Consumer Protection Act of 2010.
Harm to states and their residents
The states and the District of Columbia have standing to sue,according to the complaint, because of the harm they andtheir residents will suffer under Reg BI, which does not go farenough to alleviate consumer confusion over the differentobligations of registered investment advisors and broker-dealers,or reduce brokers' from offering conflicted advice.
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