Scottrade Files to Send Galvin’s Fiduciary Charges to Federal Court

The Feb. 15 Massachusetts complaint states that prior to Labor’s impartial conduct standards becoming effective, “Scottrade employed a firmwide culture characterized by aggressive sales practices and incentive-based programs.”

The attorneys for Scottrade argue in their March 16 filing that although Galvin’s complaint against the firm “purports to allege violations of Section 204 of the Massachusetts Securities Act …, it is clear on its face that the gravamen of these state law claims is that Scottrade allegedly failed to comply with the fiduciary rule and failed to make good-faith efforts to implement the rule.”

The filing further argues that ERISA “preempts state law claims that duplicate, supplement or supplant ERISA’s civil enforcement mechanism, such as those alleged” in Galvin’s complaint.

“ERISA’s comprehensive legislative scheme includes an integrated system of procedures for enforcement” that “is a distinctive feature of ERISA, and essential to accomplish Congress’ purpose of creating a comprehensive statute for the regulation of employee benefit plans,” the filing states.

“As a result, ‘any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is therefore preempted.’”

— Related on ThinkAdvisor:

• 13 Big Fund Firms to Report Active Share to All Investors After NY Probe
• SEC Warns Investors of Impersonators Conducting Scams
• DOL Fiduciary Rule Vacated. Now What?