Standards of conduct within professional, broker-dealer, lawyer-client, or physician-patient relations include duties of confidentiality, trust, and sometimes become fiduciary. States argue that broker-dealers be held to the same, higher, fiduciary duty standards applicable to investment advisers. FINRA’s revised Rule 2111(a) creates a “Best Interest” standard, ending broker-dealer duties post-sale. Congressional Bill language requires “the same” standards for brokers and advisers. The Senate’s language does not. The court accepts as rational the less restrictive, Senate Bill language encouraging consumer choice, lowering costs for broker-dealers, since its bill made SEC rulemaking optional.

The states’ consumer protection arguments fail. They lack standing even to protect consumers, their citizens. Financial harm is speculative. They fail in proving that tax revenue would decrease with broker-dealers only needing to “have a reasonable basis to believe that a recommended transaction or investment strategy … is suitable for the customer.” XY Planning Network, LLC v. United States Securities and Exchange Commission, 963 F.3d 244, 248 (2nd Cir. 2020).

The court limits its analysis to the SEC’s rule-making authority. It finds that it proceeded with proposed rules with public comment as required by law. It refuses to second-guess any impact on the public’s financial well-being since the policy decision of the SEC has been carefully articulated. It considers “‘such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ Fund for Animals v. Kempthorne, 538 F.3d 124, 132 (2d Cir. 2008)” Id. at 256.

Contrast that with what a reasonable mind might accept as adequate to support a conclusion about whether the former President’s private lawyer complied with standards of conduct and fiduciary duties applicable to attorneys. All lawyers owe fiduciary duties to their clients. But they also owe broader societal duties to uphold the rule of law and not demean the foundation of civility without which we would not survive. It will be interesting to watch how the interplay of standards of conduct, fiduciary duties, free speech, and rule of law apply as various oversight bodies similar to FINRA and the SEC perform their functions.

The above reminds me of a physician acting in a most bizarre manner. Decades ago, this physician’s patients were dying at an alarming rate following relatively minor procedures. The physician’s conduct was eventually determined to fall well below the standards of conduct and he certainly breached duties to his patients. The physician, believing himself superior to all, including judges, sued the regulatory agency overseeing his professional license and individuals responsible for upholding the laws and rules which protected public health, safety, and welfare. All of the physician’s frivolous, vexatious claims raised in an effort to preempt the loss of his license were dismissed. His license was revoked and remains so to the present.

The public’s health, safety, and welfare must always be considered by lawmakers. Regardless of whether financial, legal, or medical services are at issue. Everyone is entitled to minimally competent professionals. And legislation, rules, and regulations protect citizens. But that requires carefully drafted enabling legislation which directs the promulgation of meaningful rules. The first case depicts what happens when our own Congress and Senate pass inconsistent directives. A court may have no choice but to uphold the less restrictive interpretation if doing so does not invalidate a body’s intent and if protecting the public, health, safety and welfare is not expressly stated within enabling legislation.

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https://www.politico.com/news/2021/01/11/treasury-department-rudy-giuliani-sanctions-457460