Analysis and Commentary on Business Law
Which Laws Apply to Broker-Dealers? Federal Laws? State Laws? Both? General Principles Leading to an Answer

BU Law emerita professor Tamar Frankel explains the law of preemption as it pertains to broker-dealers and their investor clients. She predicts, among other things, that either the clients will demand that broker-dealers adhere to a fiduciary duty, or else that states will impose that duty on them.

The Clients’ Waiver of Their Rights Under Regulation BI of the Securities and Exchange Commission

BU Law emerita professor Tamar Frankel discusses the Securities and Exchange Commission (SEC)’s Regulation Best Interest (BI), which imposes on broker-dealers a commitment to act in the best interests of their clients. Specifically, Frankel addresses the SEC’s treatment of client waivers of the Regulation BI, which goes even further than general fiduciary law to prohibit any waiver of the broker-dealer’s conflicting interests.

The Investors’ Control of Their Investment Advisers. Who Has the Final Word?

BU Law emerita professor Tamar Frankel discusses an emerging issue affecting financial advisers—when a client may exercise control over the actions of the adviser. Frankel relates the story of an investment adviser that did not follow the client’s orders to cease certain investments, at a cost of almost $5 million to the client. As Frankel explains, the Securities and Exchange Commission (SEC) got involved, resulting in the investment adviser’s settlement for a significant payment to the client and other conditions.

Charles Schwab in Praise of Fiduciary Independent Advisers

BU Law emerita professor Tamar Frankel describes two advertisements by Charles Schwab ostensibly praising independent investment advisers, who are fiduciaries. Frankel explains why this development may lead to a separation of advice from execution of trade in a way that offers greater protections to investors.

The Argentine Election and the Limits of the Peter Principle

Cornell law professor Michael C. Dorf comments on Argentina’s national elections last month, in which the country elected as Vice President Cristina Fernández de Kirchner, who had previously served as President of Argentina from 2007 to 2015. Dorf considers why Kirchner, and indeed anyone, would accept a lower position than what she has previously held. Dorf argues that due to the Peter Principle—which states that workers in a hierarchical organization tend to rise to their level of incompetence—we would do well as a society to abandon the whole concept of a demotion.

Did the Employer Lie to the Employee?

BU Law emerita professor Tamar Frankel discusses the legal and ethical duty of an employer to discuss separation packages with an employees who is quitting. Frankel argues that while the disclosure of relevant information does not involve the law, it involves the employer’s relational culture and affects the employer’s financial situation and future plans with other employees.

Is Amazon Violating the Antitrust Laws?

Guest columnist and UC Hastings adjunct professor Samuel R. Miller considers whether Amazon is violating antitrust laws if it is (as is alleged) misusing data it obtains from third-party transactions. Miller explains two potential theories of antitrust liability—the “essential facilities” doctrine and the “monopoly leveraging” theory—and discusses the extent to which Amazon might be liable under each theory.

The Future of the United States Monetary System

BU Law emerita professor Tamar Frankel discusses the dangers of allowing non-government entities—such as Facebook and its affiliates—to issue a “basket” of crypto-currency. Frankel explains the importance of government regulation of currency and cautions that we should seek a clearer understanding of any technology or currency that can potentially destabilize the nation’s economy.

The Hidden Trading Costs of Diversification, the Demise of Brokers Fiduciary Duties, and the Legalization of Brokers’ Fraud

BU Law emerita professor Tamar Frankel explains how seemingly small hidden transaction fees can add up to a significant cost to the investor, particularly in long-term investments. Frankel explains that strictly literal interpretations of the regulations of broker-dealers lead to this unfair and costly result for investors and argues that society should focus on reinforcing brokers’ fiduciary duties of care (expertise) and loyalty (avoiding conflicts of interest).

The Other Side of “Order Without Law”

BU Law emerita professor Tamar Frankel argues that while private ordering—that is, rules of behavior without the backup of law—works well in some situations, such as among diamond traders and farmers, it cannot work in other situations, including the financial system. Frankel provides a brief review of the literature on private ordering and explains why the financial system cannot work under this model, and indeed why applying it would cause dangerous trends and damaging consequences.

Wells Fargo Bank and the Glass-Steagall Act

BU Law emerita professor Tamar Frankel comments on the renewed importance of the repealed Glass-Steagall Act which Congress passed after the failure of the financial system in the 1920s. Frankel argues that the alarming path of Wells Fargo Bank supports imposing regulations on banks similar to those levied by the Glass-Steagall Act.

Mitsubishi Bank’s Museum of Trust in Tokyo

BU Law emerita professor Tamar Frankel explains why the Mitsubishi Bank’s Museum of Trust in Tokyo, Japan, which opened a few years ago, could serve as a model for the United States to reduce the cost of mistrust and breach of trust in this country. Frankel describes the museum and considers how it affects people’s perception of the importance of trust in society.

States’ Regulation of Broker Dealers

BU Law emerita professor Tamar Frankel explains why state regulatory bodies should impose fiduciary duties on broker-dealers, whose services involve both “sales talk” and the managing of securities of investors who often lack knowledge or expertise of the transactions. Frankel reiterates points she made during testimony before the New Jersey Bureau of Securities and makes the case for the long-overdue regulation of broker-dealers as fiduciaries.

The Whistleblowers

Boston University law professor Tamar Frankel unpacks the nuanced layers of whistleblower law. Frankel describes the two main legal sources that deal with whistleblowers in the United States, as well as the process by which a retaliated against whistleblower-employee may seek protection and relief. Frankel also explores the various objections to protecting whistleblowers, noting how problems may arise in the event that an employee whose employment was terminated as a result of whistleblowing activities is reinstated to their former position via the court system.

Part Three on California’s Mandate That Women Be Placed on Corporate Boards: Dormant Commerce Clause and Improper Government Purpose Questions

Illinois law dean Vikram David Amar and professor Jason Mazzone continue their commentary on California’s mandate that women be placed on corporate boards. In this third of a series of columns on the topic, Amar and Mazzone consider whether SB 826 violates the Commerce Clause and whether there are constitutional issues with the state’s use of the law merely to make a political statement.

Is California’s Mandate That Public Companies Include Women on Their Boards of Directors Constitutional? Part Two

Illinois Law dean Vikram David Amar and professor Jason Mazzone continue their discussion of the constitutionality of California’s law requiring that publicly held corporations have a minimum number of women on their boards of directors. In this second of a series of columns, Amar and Mazzone consider whether California’s ostensible reasons for enacting and implementing SB826 are permissible and “important”—the standard required under federal intermediate equal protection scrutiny.

Employees’ Representation in Corporate Boards

Guest columnists Tamar Frankel, the Robert B. Kent Professor of Law at Boston University School of Law, and Sezgi G. Fuechec, a foreign-trained transactional lawyer with an LL.M. degree in banking and financial law, discuss the trend of employee representation in corporate boards. Frankel and Fuechec point out that while idea of employee representation in the board level is not novel, it is an important development that more corporations should embrace now, rather than waiting until there is a significant conflict between employees, management, and financiers.

Is California’s Mandate That Public Companies Include Women on Their Boards Of Directors Constitutional?

Illinois Law dean Vikram David Amar and professor Jason Mazzone consider the constitutionality of California’s recently passed law requiring that publicly held corporations to have a minimum number of women on their boards of directors. In this first of a series of columns on this topic, Amar and Mazzone analyze whether, under the Equal Protection Clause, the law fails federal intermediate scrutiny.

Meet our Columnists
Vikram David Amar
Vikram David Amar

Vikram David Amar is the Dean and Iwan Foundation Professor of Law at the University of Illinois... more

Neil H. Buchanan
Neil H. Buchanan

Neil H. Buchanan, an economist and legal scholar, holds the James J. Freeland Eminent Scholar... more

Sherry F. Colb
Sherry F. Colb

Sherry F. Colb is the C.S. Wong Professor of Law at Cornell University. Colb teaches courses in... more

John Dean
John Dean

John Dean served as Counsel to the President of the United States from July 1970 to April 1973.... more

Michael C. Dorf
Michael C. Dorf

Michael C. Dorf is the Robert S. Stevens Professor of Law at Cornell University Law School. He... more

Samuel Estreicher
Samuel Estreicher

Samuel Estreicher is the Dwight D. Opperman Professor, Director, Center for Labor and Employment... more

Leslie C. Griffin
Leslie C. Griffin

Dr. Leslie C. Griffin is the William S. Boyd Professor of Law at the University of Nevada, Las... more

Joanna L. Grossman
Joanna L. Grossman

Joanna L. Grossman is the Ellen K. Solender Endowed Chair in Women and Law at SMU Dedman School... more

Marci A. Hamilton
Marci A. Hamilton

MARCI A. HAMILTON is the Fels Institute of Government Professor of Practice, and Fox Family... more

Joseph Margulies
Joseph Margulies

Mr. Margulies is a Professor of Law and Government at Cornell University. He was Counsel of... more

Austin Sarat
Austin Sarat

Austin Sarat is Associate Provost, Associate Dean of the Faculty and William Nelson Cromwell... more

Lesley Wexler
Lesley Wexler

Lesley Wexler is a Professor of Law at the University of Illinois College of Law. Immediately... more