The Massachusetts securities division is asking New York-based Betterment to amend its communication practices so that all clients — be they institutional, retirement, or retail — receive equal treatment. The regulator wants to receive a copy of the amended practices by September 30.

The request, contained in a letter from Carol Anne Foehl, associate director of the registration, inspection, compliance and examinations section of the Massachusetts securities division, dated September 14, was first reported by The Wall Street Journal.

It relates to Betterment’s decision to delay the start of trading on June 24 following the surprise “yes” vote by U.K. citizens favoring a U.K. exit from the European Union. Global stock markets plummeted on the news, which led Betterment to halt trading on behalf of clients.

(Related: Why Betterment Delayed Trading After Brexit Vote)

Betterment spokesman Joe Ziemer told ThinkAdvisor at the time that “the right thing to do for our customers, both retail and institutional, was to wait and see how market conditions evolve during this extraordinary event.”

The problem, according to Massachusetts regulator, was that Betterment didn’t treat its retail and institutional customers equally.

The Massachusetts regulator, headed by William Galvin, Secretary of the Commonwealth, had sent Betterment a letter July 6 inquiring about the trading halt and received a response in a July 27 letter stating that “all of Betterment’s clients, regardless of whether they came direct or through advisors, were subject to the same trade management practices on June 24, 2016.”

But Betterment’s letter, according to the Massachusetts securities division, also indicated that “while Betterment did not notify any of its clients” about the trading halt, “Betterment Institutional sent notifications to the 252 advisory firms … on its institutional platform.

“There is a presumption that Betterment Institutional was privy to information to which the rest of Betterment’s clients did not have access,” according to Foehl’s letter. “There is also a presumption that this unequal access creates preferential treatment for some of Betterment’s clients.”

When asked for comment on the latest letter from the Massachusetts securities regulator, Betterment spokesman Ziemer wrote, “As a company policy, we don’t comment on regulatory matters.”

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