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Trump's SCOTUS Nominee Sided with Fiduciary Standard Advocates

July 11, 2018

Brett Kavanaugh, president Donald Trump’s nominee to replace retiring Justice Anthony Kennedy on the U.S. Supreme Court, demonstrated a strict adherence to the constitution as an appeals court judge a decade ago. He also sided with fiduciary proponents, legal experts tell FA magazine.

Appointed in 2003 by President George W. Bush to the U.S. Court of Appeals for the D.C. Circuit, Kavanaugh sided with the Financial Planning Association in its lawsuit challenging the SEC’s so-called “Merrill Lynch rule” in 2007, the publication writes. Since 1999 that rule had let broker-dealers charge fees based on assets without the need for registering as investment advisors, FA magazine writes. Two judges on the three-judge panel, including Kavanaugh, ruled the SEC didn’t have authority to make the exemption, according to the publication.

“President Trump was looking for a nominee who would be loyal to the Constitution and is a strict constructionist to the law, without trying to fashion anything new or expansive. He got that in Kavanaugh,” Duane Thompson, former managing director of the FPA’s Washington, D.C., office who helped oversee its lawsuit against the SEC, tells FA magazine. Merrill Hirsh, the lawyer who won the lawsuit for the FPA, tells the publication Kavanaugh ruled narrowly, based on his interpretation of the Investment Advisers Act of 1940.

At the same time, a Supreme Court justice like Kavanaugh bodes well for advocates of the fiduciary standard, Dan Moisand, president of the Florida-based advice firm Moisand Fitzgerald Tamayo and the FPA president during the lawsuit, tells FA magazine.

U.S. Supreme Court (Getty)

“If things got to the Supreme Court level, it’s nice to know that Kavanaugh is probably going to interpret things similarly to the way he did with the FPA lawsuit and hold the SEC’s feet to the fire when it comes to enforcing the actual law,” he tells the publication.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.