Collins looks to create fiduciary duty in financial reform bill

Sen. Susan Collins (R-Maine) is looking to use the financial reform bill to create a fiduciary standard for broker/dealers but is having trouble narrowing the scope of her proposal to only apply to her intended targets. 

"I'm trying to come up with language that would make it clear that large investment banks do have a legal duty to act in the interest of their clients, [but] it's more difficult to draft than you might think," she told reporters. "You start sweeping in anyone who sells any kind of financial product, which is not my goal." 

Sen. Robert Menendez (D-N.J.) recently teamed up with Sen. Daniel Akaka D-Hawaii) to introduce a proposal that toughens up a fiduciary standard as it applies to brokers. Collins thinks the Menendez amendment would be applied too broadly.

"His language is very broad and appears to sweep in more people than I would like," she said. 

Collins seeks to create a fiduciary duty for broker/dealers that sell product to green as well as sophisticated investors. 

"I think the obligation will apply to both institutional and retail investors," she said.  

Institutional investors in her state recently encountered a financial crisis based on the advice of a broker/dealer. 

"The state of Maine made a very bad investment in the last 2 years on the advice of a Merrill Lynch," she said. "It was clear that the state did not have the sophistication to evaluate the investment and so I don't think you can assume that because it is an institutional investor it necessarily means that the investor is sophisticated."