A top economic adviser of U.S. President BarackObama has called for tighter regulations on Wall Street brokers, saying abusive trading practices were costing billions of dollars to clients in their retirement savings each year, Bloomberg reported.
Some broker practices, such as boosting commissions with excessive trading, cost investors $8 billion to $17 billion a year, Jason Furman, chairman of Obama's Council of Economic Advisers, wrote in a memo dated Jan. 13, Bloomberg said.
The memo makes the case for a Labor Department regulation that would impose a fiduciary duty on brokers handling retirement accounts, requiring them to act in their clients' best interest, Bloomberg reported.
In recent years, the U.S. Labor Department, which oversees the regulation of retirement plans such as 401(k), has been trying to call attention to fees and other practices that could slowly eat away at workers' retirement savings.
Last March, the department proposed a rule that would require pension plan service providers to offer a guide to help employers navigate disclosures about fees and potential conflict of interests.
The retail brokerage industry has fiercely opposed the plan, saying would drive costs up, making individual retirement accounts (IRA) advice unaffordable for many investors because Wall Street brokers would not be able to sell the same types of products as they do now.
Representatives at the White House and the Labor Department could not immediately be reached for comments outside regular business hours.
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