SECURITIES INDUSTRY BILL

Order for Second Reading read. 3.04 pm

Dr Hu Tsu Tau: Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Members will have noted from the Long Title of the Bill and the Explanatory Statement that this Bill amends and consolidates the law with respect to the securities industry and repeals the Securities Industry Act, 1973 (No. 17 of 1973) and section 158 of the Companies Act on insider trading (Chapter 185 of the Revised Edition).

The Securities Industry Act, 1973, came about as a result of the Government's decision to bring regulation of the securities market in Singapore under a statutory framework. While the Government believed that some regulation was necessary, it wished to have in place a regulatory system which would promote private sector initiative and offer maximum flexibility for market participants to react to competitive pressures, especially since our market was then at its initial stages of development. The Government also believed that too tight a regulation might drive away business to other competing markets. The framework of the 1973 Act was thus founded on the premise that self- regulation by the Stock Exchange of Singapore (SES) represented the most desirable approach to regulation of the industry following closely the self-regulatory system then in force in the United Kingdom. The Government believed that the Exchange was in a position to exercise close and effective control over the securities industry. It was also encouraged to believe that the Committee of the Exchange would be exercising this control with rigour and so did not consider statutory powers over the Exchange as being necessary. This point was emphasized by the then Finance Minister, the late Mr Hon Sui Sen, in his second reading speech, where he said that the Act "acknowledges the principle of self-regulation of the Exchange by the Committee and is not intended to interfere with the day-to-day control by the Committee of normal share trading on the Exchange, nor with the traditional form of control that the Committee exercises over members of the Exchange". Since the passage of the Securities Industry Act of 1973, the Exchange has jealously guarded the autonomy conferred upon it. The SES does not provide Government with statistical returns as it is not required to do so under the Act. Nor does Government have powers of surveillance or access to SES members' books.

The Securities Industry Act of 1973 was introduced after the bear market of 1973. Subsequent to that time, the stock market consolidated and picked up. When the stock market was doing well and share prices were on the uptrend, the ability of the Exchange to self-regulate was hardly ever tested. Recently, however, the market suffered a severe bear turn and cracks began to appear in this system of self-regulation. When the MAS took over the administration of the Securities Industry Act in late 1984, it considered that due to changed conditions the existing system of self-regulation was not satisfactory.

A new Securities Industry Bill was drafted and circulated to members of the SES for comments. The new Bill would provide the MAS with powers it considered necessary to discharge its supervisory role effectively, powers which were not available in the Securities Industry Act of 1973. The draft Bill was objected to strongly by members of the Stock Exchange on grounds that the new provisions would destroy the concept of self-regulation and drive business away from the SES and from Singapore. As a result, the Bill was deferred for further consultation with the SES. It is MAS's practice to allow ample opportunity for all those who are affected by proposed legislative changes to have their views heard and objections considered.

As things turned out, events were overtaken by the failure of the Pan-Electric Group, which led to a crisis of confidence in the SES and the subsequent failure of a number of brokerage houses. These developments brought to light the inherent weaknesses of a self-regulatory system without adequate regulatory oversight, operating in an increasingly complex, fast growing and highly competitive market. With the benefits of hindsight, it is clear that in the scramble for business, brokers have indulged in margin financing and credit extension practices which went well beyond normal limits of prudence. The result is risk exposure in excess of capital resources, leading to insolvency when the markets turn. The Securities Industry Bill, 1986, is intended to rectify the weaknesses in the existing system of regulation and to provide the framework for the development of a sound and stable securities market.

If the securities industry is to grow into a significant component of Singapore's financial sector, it must not only operate fairly and prudently to maintain investor confidence, it must also keep pace with developments in the major world securities markets. This means that major reforms in the way the SES is organized and the way it conducts its business will become necessary, in the face of the accelerating pace of the internationalization of major markets in the world. With the aid of powerful new electronic devices, stocks can now be traded across borders as easily as they can be traded within a country, meaning that only countries with the most efficient and cost effective stock markets will stand to benefit. This trend towards internationalization of securities trading and increasing participation by financial conglomerates insecurities business compels us now to take greater cognizance of external factors and the competitive pressures they exert on us. The traditional style of conducting business with low capital has to give way to greater infusion of financial resources from institutions with the necessary capital. To meet the challenges ahead, policies suitable for an international environment have to be pursued and participants in the industry have to upgrade their operations and become more efficient and professional in the conduct of their business. The Bill, with provisions to raise standards of business practice and set minimum financial requirements, will facilitate the achievement of these goals.

Before I delve into the substance of the Bill, let me outline its framework. In drafting the Bill, we have studied the relevant securities legislations of the United States and Australia. The regulatory philosophy underlying the legislation in these countries is one of regulation of the industry by practitioners but subject to appropriate government control. In these two countries, the stock exchanges regulate themselves. However, they are subject to oversight by the supervisory authorities, whose principal functions are to ensure that the stock exchanges carry out their self-regulatory responsibilities diligently and that the market is generally operated prudently and in the public interest. It is recognized that self-regulation by practitioners, although desirable, must be supplemented by a series of checks and controls by a statutory body that is clear of self-interest. The Bill is drafted with these principles in mind. It is not the intention of the Government to take over the day-to-day regulation of the industry from the SES. Rather, the Bill seeks to provide the mechanism to enable the Government to ensure that the Exchange henceforth exercises proper regulation of the market. In the Bill, the MAS would be conferred with certain reserve powers over the Exchange and the MAS will not hesitate to step in should the Exchange fail in its self-regulatory responsibilities.

The Explanatory Statement describes in sufficient detail what this Bill seeks to achieve and I need not deal with the provisions in any detail. However, I think it would be useful if I highlight the main provisions of this legislation. These provisions may best be dealt with under three headings:-

(a) Supervision of the Stock Exchange;

(b) Supervision of Stockbrokers and Investment Advisers; and

(c) Regulation of Trading in the Market.

Supervision of the Stock Exchange

In order to ensure that the Exchange discharges its self-regulatory responsibilities diligently, new provisions are proposed in the Bill to give the MAS certain reserve powers over the Exchange. These include:

Firstly, the ability to amend the rules and listing requirements of the Exchange.

Secondly, the right to review the disciplinary actions taken by the Exchange and take the necessary disciplinary action against Exchange members should the Exchange fail to do so.

Thirdly, the power to issue directions to the Exchange with respect to trading activity if it is in the public interest. The exercise of this discretionary power is to curb excessive speculation in particular counters or the market as a whole and to create a "cooling off" period.

Fourthly, the ability to remove recalcitrant directors and officers of the Exchange.

Finally, the Minister may appoint persons from outside the stockbroking community to sit on the Committee of the Exchange. I hasten to add that it is not the intention to have any Government representative on the Exchange Committee. Rather, any person appointed would be from the private sector, representing the interests of listed companies and investors.

Supervision of Stockbrokers and Investment Advisers

The Bill also introduces certain basic requirements of business prudence and fair trading practices to ensure that stockbrokers and investment advisers, includ- ing fund managers, do not conduct their businesses in a manner which may jeopardize the interest of investors.

One of the weaknesses of the securities industry has been the general under-capitalization of stockbrokers. Minimum financial standards will, henceforth, have to be observed by stockbrokers to ensure that they do not undertake excessive risks and over-extend themselves. At present, the SES does not impose any margin requirements on its member firms. Left to their own devices, some firms have been too liberal in providing margin financing to their clients. To overcome this shortcoming, margin requirements would be prescribed.

It is expected that the fund management industry in Singapore will expand in the coming years, especially in the light of Government's policy to release part of the CPF savings for securities investment by contributors. At present, few regulations govern the activities of fund managers. Under the Bill, fund managers will be required to be licensed as investment advisers so as to afford greater protection for investors. An entire new Division 2 in Part VII of the Bill sets out the basic requirements of fund managers which fund managers have to abide by, such as the keeping of proper accounts. Clients' funds are also required to be kept in separate trust accounts and are not to be commingled with those of the fund manager nor to be used for purposes other than for the clients' benefit.

On the same theme of investors' protection, clauses 50 to 54 of the Bill spell out minimum ethical standards of trade practices which a stockbroker or an investment adviser has to observe. Stockbrokers, investment advisers and their representatives alike are required to disclose to their clients any interest they may have in the securities recommended by them to their clients. In addition, they must have a reasonable basis for making their recommendation. Such reasonable basis includes an obligation upon stockbrokers, investment advisers and their represenatives to conduct an enquiry in respect of their clients' investment objective, financial situation and particular needs. Further, a stockbroker is required to give priority to his clients' orders in preference to his own.

On the subject of supervision, the role of auditors would be enlarged, if necessary, to supplement the supervisory efforts of the administering authority. The MAS may also appoint auditors to conduct surprise audits of stockbrokers and investment advisers. In line with the Banking Act, the MAS may conduct inspections of the Exchange, stockbrokers and investment advisers. To enable the MAS to discharge its supervisory functions efficiently, the Exchange, stockbrokers and investment advisers are required to furnish relevant returns. These provisions are found in Division 3 of Part VII and clause 12 of the Bill.

Regulation of Trading in the Market Place

Part IX of the Bill contains revised provisions dealing with trading in securities. The significant feature of this Part is the new provision for dealing in securities by insiders, ie, persons with access to price-sensitive information. A notable difference under the new provision is that an offence is committed whether or not the dealing is undertaken with the intention of using information to gain an advantage; the purpose of dealing is irrelevant.

The penalties too in the Bill have generally been increased relative to the present Securities Industry Act so as to enhance their deterrent value.

Finally, the role of the Securities Industry Council (SIC) remains unchanged under the Bill. As there appears to be some misunderstanding about the role of the SIC, I would like to take this opportunity to clarify the SIC's position. The SIC was formed in January 1973 as an advisory and consultative body to the Minister for Finance on matters concerning the securities industry. The SIC's advice may also be sought by the Committee of the Stock Exchange on such matters as listing requirements, suspension and delisting of companies and the raising of money through the issue of securities on the Exchange. The only regulatory function of the SIC is the administration of the Singa- pore Code on Take-Overs and Mergers. Its role in this respect is to ensure that the rules relating to the proper conduct of take-overs and mergers, as set out in the Code, are observed by parties involved in these transactions.

Therefore, investors should not labour under any illusion that, in allowing new companies to be listed, the SIC, in any way, guarantees the profitability or continuing viability of any company. Judgment of the investment merits of any company must lie with the individual. Furthermore, the SIC cannot prevent speculators in the market from getting their fingers burnt. Speculation always carries risks and little can be done to protect people who, in their desire to get rich, knowingly expose themselves to such risks.

Members will have noted by now, from what I have just outlined, that the Bill seeks to try to strike a balance between prudential control and freedom of action. However, I would like to make it clear that the Bill is not a panacea for all ills that may develop in the securities industry. An important point brought up in the previous Second Reading speech for the Act some 13 years ago bears repeating. The Bill does not attempt to prevent speculation, neither does it act as a guarantee agaist loss. Some speculation attends every anticipation of short or long-term price trends which induces trading activity on the Exchange. It is and always must remain the responsibility of the individual investor to decide as to the advisability of any particular investment and he should bear the full risk of price fluctuations inherent in such an investment.

Sir, I beg to move.

Question proposed. 3.23 pm

Mr Tan Soo Khoon (Alexandra): Mr Speaker, Sir, I rise in support of the Bill moved by the Minister.

Sir, this Bill seeks to control the securities industry and to give the Monetary Authority of Singapore (MAS) wide-ranging powers to administer the new Act. The Stock Exchange, as we all know, is a place where prices of shares of publicly listed companies can be manipulated by those who are greedy to the detriment of many small investors. And I therefore welcome this move which will serve to regulate the activities of the Stock Exchange and those who are involved in it. In the light of the recent crisis on the Stock Exchange and the failure of companies like Pan-Electric, this Bill is most welcome. And much as I am tempted to say that this appears to be a case of bolting the stables after the horses have run off, I think it is also better late than never.

Sir, the Minister has told us that this Bill was originally circulated to stockbrokers and because of heavy criticism and adverse comments from stockbrokers, the Bill was not proceeded with and not presented to the House. I find this rather disturbing. I would not expect the stockbrokers at any rate to respond favourably to a Bill which seeks to regulate or to curtail their activities. But I feel that we should not have allowed this to happen in view of our overall efforts to promote Singapore as a financial centre. What all that boils down to is that if there had been no Pan-Electric, there might not have been this Bill before the House today.

We have also been told by the Minister in a recent sitting that the MAS, in fact, knew about the existence of forward contracts. And yet the MAS or the Ministry of Finance did not do anything about it. They did not see what some of the greedy operators were doing and they also failed to see that many of the stockbroking firms were in fact borrowing many times beyond what their capital base permitted. It therefore could only mean that the MAS for so long failed to see the implications of what was going on in the Stock Exchange, although many of the goings-on were already happening for a long time.

This brings me, Sir, to my next point, ie, the Bill which we are about to pass and become an Act will be as good only as the people who are administering it. We have in the MAS officials who are more familiar with the banking industry. Or at least they think they know about the banking industry. I say this because the MAS has tremendous powers under the Banking Act to administer the banking industry. But what has caused unhappiness in banking circles is not so much the Act itself but it is the way the Act has been interpreted and the powers exercised by officials of the MAS. What it means, Sir, is that when an Act like this is administered, it must be done with circumspection. And it can only be done with care and caution only if the people administering the Act are experienced people. It is my opinion that stockbroking and banking are as different from one another as black is different from white.

Sir, in order to ensure the success of the implementation of this Act and in order to ensure that there is close rapport between the stockbroking community and the MAS, experienced persons from the securities industry must be engaged to implement this Act. I am sure the MAS could look into the question of employing retired brokers, senior members of the stockbroking industry, to help in this.

Sir, may I now move on to a few other comments. There is a need for us to encourage more competition amongst the stockbroking community. But the main stumbling block towards this is that the whole industry is a closed shop. In other words, if you want to become a stockbroker, you have to pay a rather high fee in order to gain admission to the Stock Exchange. There are, of course, merits to this. But, at the same time, remisiers and dealers who act on behalf of the stockbroking firms in their dealings are also required to pay excessive transfer fees when they decide to move from one firm to another. For instance, if a remisier who works in firm A wants to join firm B, he will have to pay a few thousand dollars. And when he moves from firm B to firm C, the transfer fee is double what he paid previously. This, of course, prevents remisiers and dealers from hopping from firm to firm. But the adverse effect of this is that the remisiers are stuck with the firms they work for and the firms in turn see no necessity to take steps to keep the remisiers knowing that they would not run away.

Now, what are these steps to keep remisiers? I believe remisiers could do with a lot of back-up services like research from the firms. Such research, of course, can then be passed on to their clients. In other words, Sir, we could see the presence of a more professional service from the firms and their remisiers. But what do we have today? We have remisiers who are merely acting as commission agents, buying and selling for their clients. Most of the investing public know that remisiers' or dealers' knowledge is limited to telling their clients to buy stocks when the prices are going up and to sell when the prices are going down. Quite often such information is always a bit too late for clients to act upon. So, I believe, Sir, if this can be looked into, the market can further develop with more intensive competition.

Sir, another question about remisiers. Remisiers are required to place deposits with the broking firms they work with. Recently it was reported that some stockbroking firms have gone bust and their remisiers could not claim back the deposits which have been left with their firms. Sir, perhaps provision should now be made for the remisiers' deposits to be placed on trust so that in case the firms go bust they still have the money.

Sir, I have two other questions to ask the Minister. Sir, in order to inject more professionalism into the industry, recently the Big Four banks were allowed to participate and become brokers. Sir, my question is, why are the Big Four banks allowed to send out letters to members of the public to solicit business. I understand that the Stock Exchange does not permit brokers to advertise their services. So I would like to know why the new brokers are allowed to solicit business by writing to members of the public or has a new set of rules been set for these new entrants.

Lastly, Sir, I feel that this Bill is of great importance not just to the stockbroking community, but to the investing public as well. It also will help us in our efforts to promote ourselves as a centre of financial standing. In view of the significance of this Bill, Sir, I think that the Bill should be referred to a Select Committee. The Minister has already just said that a lot of members of the stockbroking community would be prepared to give their comments and that MAS will always be prepared to hear the views of those affected by its own laws and regulations. I therefore feel that it is only appropriate that this Bill be referred to a Select Committee.

Dr Augustine H.H. Tan (Whampoa): Mr Speaker, Sir, I would like to support my colleague when he calls for the Bill to be referred to a Select Committee. I support this recommendation because although the Minister mentioned that the MAS had consulted the Stock Exchange members, I feel that stockbrokers at this stage are not able to think very clearly. They are under great pressure, financial and otherwise, some of them are going out of business altogether. And when you are under pressure you can accept anything. So I think in fairness and for the good of the orderly development of the financial institutions in Singapore, we should not be in a hurry to enact a Bill like this without proper consultation.

The objections which I lodge against the Futures Trading Bill are also applicable to this Bill, namely, that the MAS has got such sweeping powers that any of its officers can virtually revoke any licence or cancel any licence on the grounds that the firm in question is not operating efficiently or justly or fairly, whatever. Furthermore, whereas this particular Bill, the Securities Industry Bill, allows for appeal to the High Court, the Futures Trading Bill does not allow any such recourse. So the two Bills seem to have been drafted by different people altogether. The point which the Minister made earlier in reply to my drawing his attention to the lack of recourse to the High Court for futures trading seems to be besides the point, because he is allowing such recourse in the Securities Industry Bill. One example of the lack of consultation is the asymmetry in the treatment of the MAS itself and offences by the trading community. Clause 110, for example, protects the MAS from any prosecution arising out of neglect or default in the performance of its duties provided such neglect or default is done in good faith. I do not know what that means. Whereas the clause following 110, ie, clause 111, says that where a body corporate is guilty of an offence under the Act, then any of its officers, director, employee, and so on, directly or indirectly is a party to the offence, is also deemed to be guilty of that offfence. You can see the asymmetry there. Everybody else is guilty but where an MAS officer is negligent provided he demonstrates good faith, he is protected from any prosecution. I do not think that is desirable. And if we are going to project ourselves as a financial centre of integrity and invite investors from the advanced countries, then we ought to have laws which are fair to everybody concerned.

The requirement that every contract note written by a stockbroker should have sufficient information. This is on pages 45 and 46. I think it is a good one but there is one omission which I would like to draw the attention of the Minister to, and that is the time of the transaction is not required to be specified on the contract note. I think this is important because there have been examples of cases of abuse. Suppose somebody calls on the phone to his stock- broker. He buys a stock early in the morning or when the Stock Exchange opens in the morning and the note is not executed until later in the afternoon, by which time if the price of the stock had gone up the broker could claim the transaction to be his personal transaction and benefit thereby. If the price is the same or had even gone down, he would then write it as belonging to the client in question. I have heard of fund managers who do this as a matter of routine in collaboration with the stockbrokers that any purchases made on behalf of the manager's clients can be ascribed to the fund manager himself if it is favourable enough. So I would urge that a provision be made for the time of transaction to be written into the contract so as to prevent any such abuses in future.

Then, Sir, the Minister mentioned the integration of our securities market with markets elsehwere. I would like to draw particular attention to the integration between our market and the Kuala Lumpur Stock Exchange. We have drawn up this very elaborate Bill. But the question is, hasthere been consultation with the authorities in Malaysia? And how is this going to work in relation to the Kuala Lumpur Stock Exchange? The Pan-El crisis came about because of manipulation across the causeway. What is there to prevent future manipulation in future? If the regulations governing the KLSE are less onerous than ours, then a lot of malpractices could be instigated or could be initiated across the causeway, again to our detriment. Is it time to separate the two stock exchanges? It is a question which the Minister might well have to consider.

The other thing which I would like to draw attention to is the nature of our stock market here in Singapore. Anybody who has made a comparison between our market and the markets in the advanced countries would notice the very high price earnings ratio here. Is it due to the fact that we do not have a capital gains tax and therefore people are going more for capital gains, or the prospects of capital gains rather than investing for returns by way of dividends? Is it because of the more speculative nature of our market? Or is it because of the thinness of the market that we have. These are questions that we need to address if we want to protect our investors from manipulation in the future.

Mr Chng Hee Kok (Radin Mas): Mr Speaker, Sir, I welcome the introduction of this Bill. After the events which rocked the stock market in the last few months, hon. Members and everyone who is concerned with the orderly development of our Securities Industry must welcome this Bill.

Sir, I do not know to what extent the substantive provisions of this Bill differs from the draft amendments circulated by the Minister for Finance to the stockbroking community in June 1985, but I must assume that this Bill is a more encompassing and tougher law in the light of subsequent events. As the reaction to the draft amendments circulated earlier evoked a strong reaction from the stock broking community, the reaction to this Bill would have been much stronger if not for the events relating to Pan-El. I sympathize with the Minister for Finance. Had he tried to impose the government's will on the stock market, it will have evoked a strong negative response even from those whom the law is meant to protect, namely, the investors.

Nevertheless, Sir, this Bill is necessaary and it is good to look at its passage in perspective. Similar changes have been made in several countries to laws governing the securities industry in the last few years, as mentioned by the Minister. The most recent example is the United Kingdom which, in December 1985, introduced the Financial Services Bill. This Financial Services Bill was introduced amidst a number of scandals ranging from the collapse of Johnson Matthey Bankers to multi-million dollars fraud and swindle at Lloyds, the world's largest insurance company. Well, as Members can see, even well established markets like the city in the United Kingdom needs adaptation and occasional reform.

However, Sir, no matter how complete and encompassing our Bill is, it depends to a large extent on the actions of those who are involved in the securities industry. As financial deals become more complex, a healthy development of the industry must depend more on the integrity and sincerity of its key players and less on government control and regulations.

Let me now turn to insider trading and market rigging. Sir, I hope that the wider provisions of Part IX of the Bill will inhibit those wrongful practices which goes to destroy the market. Market rigging and insider trading saps the confidence of investors, who in turn blame the government for not taking action. However, insider trading and market rigging practices are very difficult to prove. Hence we can only hope that those who choose to rig the market must understand the severity of the offence. Therefore the deterrence must be very stiff. In this, I am disappointed with section 104 on penalties for market rigging and insider trading. Presently, similar offence under the 1973 Act carries a maximum penalty of a fine of up to $30,000 or five years' imprisonment or both fine and imprisonment. However, clause 104 of the new Bill stipulates a fine of up to $50,000 or a maximum jail term of seven years, but not both a fine or jail sentence. It is inadequate even if the maximum fine and jail sentence are imposed as the gains of market rigging operations now run into tens of millions of dollars. As a comparison, the Bill which we have just discussed, the Futures Trading Bill, the penalty for market manipulation is a fine of up to $100,000 or an imprisonment term of seven years or both. The Minister has also mentioned that for futures trading, the main players are professionals. For the stock market, it involves many men-in-the-street, their hard-earned money and most have very little experience. Therefore, I think clause 104 must be revised.

Although the law has been improved, I am apprehensive that we may not have sufficient numbers of officials who have the knowledge and capability to spot any misdemeanours until it is too late. I think this point has been well brought up by the Member for Alexandra. In an interview in June last year, in discussing the lack of success of the Securities and Exchange Commission (SES) in New York on insider trading, the Minister for Finance was quoted as saying:

'Certainly, we have no intention of going the SEC route. We don't have the manpower resources to mount an effort like that.' Even if we are going to do it differently, I must ask the Minister if he is satisfied that he has the manpower resources to make the provisions of insider trading and market rigging effective.

Sir, the clause about the offering of advice or recommendations is welcomed as it now places the responsibility squarely on those who offer advice. I have two comments on this. Clause 50 mentions about advice offered through circulars or other similar written communications. I am uncertain if this takes into account the new technologies, such as information offered through computers. They are not written information but information which is of a transient nature and is read from a monitor. You switch off the computer, the information disappears. Clause 50, I think, should have been more explicit on the various modes of communication to prevent any misunderstanding or it is a loophole in the law.

Sir, my other reservation relates to advice offered by those who operate out- side Singapore, in particular, stockbrokers who are based in Kuala Lumpur. This again relates to advice offered by stockbrokers and investment advisers. As there are a number of common listings of several companies on both the Kuala Lumpur and the Singapore exchanges, it is conceivable that our law may be at variance with that in Malaysia on this particular issue. Is our law still enforceable if a breach takes place in Kuala Lumpur? A Kuala Lumpur broker offers advice on companies listed on the Kuala Lumpur Stock Exchange which does not contravene the Malaysian law but contravenes our law. Is it enforceable? I have already stated my reasons for a separation of our market and make it independent and I am pleased that it has the support of the Member for Whampoa.

Generally, I see difficulties of enforcement in cases where the breach is from across the Causeway. As long as we have different standards of practice, such as disclosure standards, procedures, listing requirements and code of conduct, I think the Bill will be found lacking in some areas. Overall, Sir, it is an improvement over the 1973 Act in that the present Bill puts a greater burden of care on dealers and investment advisers in their relationship with their clients.