SEC’s Broker Conflict Rule Faces Court Challenge From Advisers (1)

The SEC’s new conflict-of-interest rule gives broker-dealers a competitive advantage, an investment adviser network and one of its members said in lawsuit filed in a New York federal court.

The rule imposes a lower standard for brokers and “reduces the incentive” for them to register as advisers and become network members, according to a complaint filed against the Securities and Exchange Commission in the U.S. District Court for the Southern District of New York Sept. 10.

Broker-dealers increasingly perform similar functions to advisers without facing the same stringent regulations, the complaint said. The 2010 Dodd-Frank Act directed the SEC to ...