WASHINGTON — Democratic lawmakers on Tuesday mulled whether investment bankers should be subject to additional criminal liability, including jail time, for misguiding customers on investment decisions.

"I have long believed that it is insufficient to have fines for fraud," said Sen. Arlen Specter, D-Pa. "For corporate fraud, if you have a fine, it is calculated as part of doing business."

Specter, chair of the Senate Judiciary Subcommittee on Crime and Drugs, said in a hearing on Wall Street fraud that criminal convictions might be appropriate punishment and could serve to deter future fraud.

The hearing was set against the ongoing Senate debate over regulatory reform legislation and charges that Goldman Sachs knowingly misled clients about the riskiness of certain securities.

Key to the issue is a broker's obligation to give investment advice that is in clients' best interest. Under current law, brokers are not held to the stricter legal requirements imposed on investment advisers to give advice that is in clients' best interest.

The bill passed last year in the House of Representatives would require the Securities and Exchange Commission to adopt a so-called "fiduciary duty" to brokers who provide investment advice to individual investors, and would allow the agency to extend that duty to institutional investors. The current Senate reform bill would do nothing to strengthen the fiduciary duty for brokers, but Sens. Robert Menendez, D-N.J, and Daniel Akaka, D-Hawaii, announced last week they intend to introduce such an amendment.

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