Massachusetts Supreme Court Affirms Fiduciary Duty Rule for Brokers
From the desk of Jim Eccleston at Eccleston Law
The Massachusetts Supreme Judicial Court ruled that William Galvin, the state's top securities regulator, acted within his authority in September 2020 when he established the state's investment advice rule, which imposed a fiduciary duty rule on financial advisors.
The court also determined that this measure does not conflict with Regulation Best Interest (Reg BI), the broker-dealer standard introduced by the Securities and Exchange Commission in June 2020.
In March 2022, a Massachusetts Superior Court judge invalidated the Massachusetts fiduciary rule in response to a lawsuit brought by Robinhood in April 2021. The Massachusetts court stated that Reg BI serves as a minimum standard and does not preclude state regulation for the enhanced protection of investors. As reported by InvestmentNews, the case was sent back to the lower court for additional administrative proceedings.
Secretary of the Commonwealth William Galvin expressed his satisfaction with the ruling, calling it a landmark decision. He emphasized the importance of a broker's fiduciary duty to their customers and the role of his securities division in safeguarding investors and regulating broker-dealer misconduct. Galvin stated that the upheld rule will provide Massachusetts investors with the highest level of protection when receiving investment advice from brokers.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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