The recent financial crisis and the economic turmoil it has brought about unveiled more than a few weaknesses of the current financial services industry. Is has shown, for instance, that some of the latter’s economic predictions and financial investments proven to be utterly wrong. But equally (and sometimes even more) severe were the accumulating evidence that the financial sector’s seemingly strict codes of conduct – which allow them to be as powerful as they are – have been breached too often and for too long.

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The backbone of the whole financial sector is trust. Individuals, institutions and countries allow the financial sector to hold, manage and invest their liquid equity because they neither a plausible alternative to the current structure of the banking system, nor they have a reason to doubt financial firm’s commitment to its clients. This commitment, known as fiduciary duty, is the subject matter of this paper, which calls for a rigorous rethinking about the concept in light of the recent financial crisis.

A discussion about fiduciary duty usually revolves around two kinds of duties, namely duty of loyalty and duty of care. The specific characteristics of each duty (in terms of the behaviors they prescribes) may vary among contexts (e.g. corporate vs. financial affairs) and/or fiduciaries (e.g. directors vs. investment bankers), but the general meanings of these two duties define fiduciaries’ responsibilities to principals in terms of:

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