From NJ-- Gov. Phil Murphy says he's marking the 10-year anniversary of the 2008 global economic crisis with a plan to help protect New Jersey residents seeking to invest their money.
Murphy announced Monday his administration is planning to issue a rule imposing a fiduciary duty on all investment professionals -- including broker-dealers -- in the Garden State.
It's the latest move the Democratic governor has taken to counter Republican President Donald Trump.
Murphy said the lack of such a rule at the federal level helped fuel the economic meltdown a decade ago. So the administration of Trump's predecessor, Democrat Barack Obama, instituted a duty on broker-dealers to help prevent future problems.
But a federal court struck down the rule in March, and Trump's administration dropped the case.
Murphy's proposal would re-establish the standard in New Jersey.
"At a time when President Trump is systematically dismantling the consumer protections implemented in the wake of the 2008 economic crash, we are building stronger safeguards for our consumers," Murphy, a frequent Trump critic, said in a statement.
"The fiduciary rule announced today would provide New Jersey with the strongest investor protections in the nation and send a clear message to Washington that New Jersey is committed to ensuring its residents are never again left vulnerable to the predatory financial practices that led to the economic collapse 10 years ago," Murphy added.
So what would the rule actually do? In short, Murphy said most consumers assume all financial professionals are required to give unbiased advice.
But while investment advisers and their agents do carry such a responsibility, broker-dealers and their agents do not, the governor said.
Thus, most investors don't realize broker-dealers often receive undisclosed financial benefits for pushing clients toward certain investments, Murphy said.
This proposed regulation would institute the requirement on broker-dealers, too -- just as Obama's rue did.
The move would affect 2,120 broker-dealers, as well as 205,000 of their agents, registered in New Jersey.
The rule is being initiated by the state Bureau of Securities, which will ask for public input before moving forward with the plan.
State Attorney General Gurbir Grewal said the move will "make the state's financial markets stronger and safer for New Jersey families."
The Associated Press contributed to this report.
