It has long been understood that investment advisers are fiduciaries to their clients. See SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180 (Supreme Court, December 9, 1963). The SEC in 2019 issued a release further defining and interpreting the scope of this fiduciary obligation owed by an investment adviser to its clients. Commission Interpretation Regarding Standard of Conduct for Investment Advisers. In issuing this interpretation, the SEC stated that it was not making new law, but largely memorializing existing law. As the SEC indicated, there have been over the years numerous enforcement actions brought against investment advisers for failures to comply with their fiduciary obligations. Although the SEC's interpretation regarding an investment adviser's fiduciary obligations discusses both an adviser's duty of care and its duty of loyalty, the great majority (virtually all) of the enforcement cases relate to the duty of loyalty and an adviser's breach of that duty or failure to adequately disclose its conflicts of interest. SEC guidance regarding an adviser's duty to its clients has also touched on subject such as the enforceability of hedge clauses and the manner in which an adviser charges its fees. (It should also be noted that the legal question of an adviser's obligations to its clients is not solely a matter of federal law and SEC rule making; the MSRB, the banking regulators and state regulators also have authority in this regard over investment advisers subject to their jurisdiction.)
The SEC investment adviser interpretation was issued as part of a package of new rules and guidance that are intended to strengthen the obligations that broker-dealers and investment advisers owe to their clients. The two other principal parts of this package are Regulation Best Interest and the requirement that both broker-dealers and investment advisers send their clients a Form Client Relationship Summary. (See the topic pages on each of Regulation Best Interest and Form CRS. These various SEC initiatives are all closely related to the "DOL Fiduciary Rule," which, although killed by the courts, lives on in its influence.
At the same time that the SEC issued the above rules and guidance, it also issued an interpretation of the advisory activities that a broker-dealer may offer as incident to its advisory services without being required to register as an investment adviser. See the topic page on the "Investment Adviser Definition."