NASAA Recommends Improving Transparency For Fee Disclosures

Posted on May 14th, 2014 at 8:00 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

In a survey of 34 broker-dealers from across the country, the North American Securities Administrators Association Inc. (NASAA) found widely inconsistent disclosure methods and questionable practices regarding fees charges and markups.

NASAA found disclosures to be lost. For instance, fee disclosures ranged between one paragraph and seven pages and were sometimes embedded in a document that totaled anywhere from one page to 45 pages.

The report recommended that NASAA work with the FINRA to develop a model fee disclosure that is simple to read, easily accessible, and can be used effectively by investors to understand fees and to conduct fee comparisons

The report also recommended that NASAA set up a task force to work with the financial industry in standardizing the language, placement, and structure of fee disclosures similar to the approach taken in the banking industry. It also encouraged more investor education.

The Financial Services Institute, which is comprised of independent broker-dealers and financial advisers, supports making fee disclosures more meaningful to investors as long as standardization takes into account differences among firms.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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