SEC Wants Brokers to Treat Clients Better: What’s at Stake

• To nix broker conflicts, SEC unveils ‘best interest’ standard • Proposal has prompted confusion, even among some SEC officials

Wall Street is known for making money by selling risky investments with complicated names. Some examples: equity indexed annuities, structured notes and leveraged inverse exchanged traded funds.

The days of marketing such products aren’t necessarily coming to an end. But things could get more challenging if regulators require financial firms to make sure whatever they are peddling is in their clients’ interests.

Last week, the U.S. Securities and Exchange Commission took the first step byproposing a new “best-interest” standard for brokers. ...