Of Fiduciaries

One recurring line of questioning in yesterday's Goldman testimony, involved the notion that that market makers ought have a fiduciary obligation towards their customers. Olympia Snowe has taken a rather stark position:

10. Fiduciary Duty: Swaps dealers should have a special duty of care to pension funds, endowments, retirement funds, and state and local governments to protect vulnerable market participants from being taken advantage of by dealers.

Putting aside logistical questions about how such a duty could be coherently structured -- can dealers really be required to only buy what they want to sell and only sell what they want to buy? -- Ms Snowe's characterization of pension funds, endowments, retirement funds, and state and local government investors as being "vulnerable market participants" is jarring.

If she is correct, then Pension Fund managers who advertise themselves to their own clients as being -- and are paid to be -- savvy and sophisticated, not vulnerable and out-of-their-depth, investors appear guilty of fraud / misrepresentation.