Following the financial crisis, Congress passed Dodd-Frank. The legislation authorized the Securities Exchange Commission to enact rules for a “fiduciary duty standard” in which stock brokers, at firms like Merrill Lynch and UBS, would be required to put the customer’s interest first.

This fiduciary standard stands in sharp contrast with the existing “suitability” standard in place in the securities industry. Instead of putting a client’s interests first, brokers at Merrill and UBS are simply required to make suitable recommendations judged at the time of a stock, bond or mutual fund purchase and not at any point in time later on. The broker’s recommendation simply has to be consistent with the best interests of the customers, based on his or her needs, objectives and unique circumstances.

Investment advisers and advisers who consult pension funds already adhere to the fiduciary standard, which is far more time consuming and potentially more costly. Wall Street doesn’t want that. The fiduciary standard has been dead on arrival at the SEC. Indeed, it looks like the Commission has caved under pressure from Wall Street and is not going to enact the fiduciary duty standard. As this blog noted a few weeks ago, Wall Street and its high-priced lobbyists are performing a full scale beat down on Dodd-Frank, looking to gut investor protection standards that are in place as well as block potential room for improvement, including the fiduciary standard.

However, there is the faintest glimmer of hope for the fiduciary standard for stock brokers. And it’s coming from the oddest of places, Wall Street’s very own self-regulatory organization, FINRA.

In its January 2015 letter to its member brokerage firms, FINRA announced that one of its 2015 priorities of its broker-dealer members was enacting a fiduciary duty standard for brokers who are regulated by FINRA. As Mark Schoeff of industry newspaper InvestmentNews recently noted: “A central failing FINRA has observed is firms not putting customers’ interests first,” the letter states. “Irrespective of whether a firm must meet a suitability or fiduciary standard, FINRA believes that firms best serve their customers — and reduce regulatory risk — by putting customers’ interests first. This requires the firm to align its interests with those of the customer.”

In other words, FINRA believes it doesn’t matter whether the SEC creates a fiduciary rule for brokers. FINRA is threatening to put the standard in place on its own.

This causes great consternation for Wall Street banks and brokerages that will now have difficulty peddling their high fee opaque products such as structured products, equity link securities, non-traded REITS, closed-end funds and the like. As Schoeff reported: “The emphasis on fiduciary duty, which applies to investment advisers, caught some by surprise in a document by the industry-funded broker-dealer regulator because brokers must only adhere to a suitability standard. Under suitability, a broker can recommend high-priced investment products as long as they meet a client’s investment goals and risk tolerance.”

We will see if FINRA follows through or whether they will be stonewalled by Wall Street. We only hope that FINRA keeps up the pressure on brokers. What a game changer it would be for investors if firms were actually required to put the customer’s interest first.

Zamansky LLC are investment and stock fraud attorneys representing investors in federal and state litigation and arbitration against financial institutions.