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Lou D'Agostino featured in "On Wall Street" Magazine Article entitled: "Looming Liabilities"

Apr 30, 2014 11:51:18 AM ,


APRIL 30th, 2014

If the SEC's proposed fiduciary standard gets the thumbs up, professional liability insurance for broker-dealer reps, already up 30% over the past four years, will continue to soar. That's the expectation among insurance brokers specializing in errors and omissions insurance, which protects FINRA-registered broker-dealers and their officers, directors and employees from client lawsuits over negligence - either real or imagined.

Lou D'Agostino Excerpts:

    • Even if the fiduciary standard doesn't go into effect, E&O claims are not expected to decline. "On every single broker-dealer application for insurance, we ask them to disclose the number of customer complaints they have received in the previous year," says Louis D'Agostino, Senior Vice President and Financial Institution practice leader at insurance broker Iron Cove Partners in Garden City, N.Y. "The average is five to seven. The chance of these complaints eventually becoming actual claims is high."


    • From more than a dozen carriers in the market a decade ago, less than a handful remain today. "It's no longer a competitive market with premiums up at least 30% in the aggregate over the last four years" D'Agostino notes.


    • On the other hand, a fiduciary standard like the one imposed on investment advisers, would require broker-dealers to put their clients' best interests before their own when providing retain investment advice. "The change to a fiduciary standard would put the onus on the broker-dealers to up their game, professionally speaking, in order to reduce the risk of a lawsuit," D'Agostino says. They need to adopt more of a "hands on" approach similar to RIA's, which, he notes, have "very formal processes" in place and have implemented a "culture of compliance."


CLICK HERE for entire Article

Tags: Insurance, insurance, Iron Cove Posts, Broker-dealer, Cost, Coverage, Coverage Overview, Dodd-Frank, Errors and Omissions, Fiduciary, Fiduciary Liability, Finra, Liability, Registered Representative, Regulation, SEC, SEC Investigations, Securities Dealers

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