PROTECTING INVESTORS
Galvin sets broker conduct regulations
Resisting calls to delay his plan, new regulations affecting broker-dealers in Massachusetts will take effect March 6, after a filing by Secretary of State William Galvin.
Galvin, in a press release, said the new fiduciary conduct standard regulations will “provide stronger protections for Massachusetts investors, by imposing a heightened duty of care and loyalty on broker-dealers and agents.”
The rule will require broker-dealers and broker-dealer agents to provide investment advice and recommendations without regard to any interests but those of the customer.
“This standard will protect Massachusetts retirees and their hard-earned retirement savings from conflicted investment advice, which has been shown to cost investors billions of dollars each year,” Galvin said. His office filed the final regulations late last week.
On Feb. 12, a bipartisan group of 25 lawmakers sent Galvin a letter asking him to hold off on the new standard until a new U.S. Securities and Exchange Commission rule becomes effective in June.
Echoing concerns raised during a January public hearing, the legislators wrote that they support the regulations’ objectives but “have heard from numerous constituents who fear the Proposal goes too far and will have harmful unintended consequences to investors.”
“We are particularly concerned that this could limit brokerage services and increase costs for the same low and middle income Massachusetts investors the proposal intends to protect,” the letter said. “The brokerage model is vital to these investors, many of whom do not want or need more costly advisory services.”
SIFMA, a national trade association for broker-dealers, investment banks and asset managers, has been following the proceedings in Massachusetts.
“We look forward to reviewing the rule with particular attention on whether it is consistent with existing federal fiduciary and best interest standards to which our members are subject, or whether it may conflict in ways — whether intended or unintended — that would impede our members from best serving their retail clients,” SIFMA President and CEO Kenneth Bentsen Jr. said in a statement.