In the wake of the demise of the Department of Labor’s (DOL) fiduciary rule, New Jersey intends to proceed with a plan to impose its own fiduciary rule on brokerage and advisory professionals. Although the details of the proposed standard have yet to be announced, it is nonetheless expected that the proposed rule will create a standard of care well beyond the standard that is currently being proposed by the Securities and Exchange Commission (SEC).

On Sept. 17, 2018, New Jersey Governor Phil Murphy announced a plan for using the broad rulemaking authority of the New Jersey Bureau of Securities (the “Bureau”) in order to administratively create a uniform fiduciary standard applicable to both investment advisers and brokerage firms doing business in New Jersey. Governor Murphy said he was directing the Bureau to propose new rules establishing a uniform fiduciary standard in New Jersey because of his dissatisfaction with recent activity at the federal level, specifically the Trump Administration’s decision to abandon the defense of the DOL’s fiduciary rule and his view that the SEC’s proposed Regulation Best Interest (“Reg BI”) announced in April 2018 would not sufficiently protect New Jersey investors.

Notice of Pre-Proposal