Wall Street advisers and brokers are tussling over the details of a looming regulatory overhaul as Washington takes steps to prevent another Bernard Madoff scandal, Bloomberg reports. Advisers want brokers who counsel clients to be subject to the same oversight they’re under; currently, their brokerage counterparts can profit by swaying customers to buy their firm’s own financial offerings, even if they’re a bad risk.
Though subject to federal oversight, brokers remain exempt from laws that require advisers to act in clients’ best interests. Brokers resist the proposal, calling additional regulation unnecessary. But existing rules didn’t stop Madoff’s scheme, which President Obama says indicates “how badly reform is needed.” A revamp will probably include a watchdog for the millions of fee-based brokerages.