By Suzanne Barlyn A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)–It’s getting trickier for federal lawmakers to oppose a fiduciary standard that would protect the retail investor, especially when their sympathy now extends to the institutional investor.
Recent legislative proposals would establish a fiduciary duty for brokers who advise certain institutional investors, mainly states, municipalities and public pension funds. That is, those brokers would have to act in these investors’ best interests.
The initiatives stem from the recent Goldman Sachs mortgage derivatives case and the company’s insistence that it did not need to take the side of “sophisticated institutional investors” to whom it sold risky products. Civil fraud charges were filed last month against Goldman Sachs Group Inc. (GS) by the Securities and Exchange Commission and high-profile hearings by a Senate panel put the company’s executives in an unpleasant spotlight.