William Galvin, Massachusetts’ top securities regulator.

Massachusetts’ top securities regulator, William Galvin, told ThinkAdvisor on Monday that his case against Scottrade for violating the Labor Department’s fiduciary rule will “go forward” despite the fact that the U.S. Court of Appeals for the 5th Circuit issued the order to the kill the rule on Thursday.

A staunch fiduciary rule advocate, Galvin told ThinkAdvisor that he was “disheartened and disappointed” with the 5th Circuit’s decision.

“In my estimation, it was wrongly decided and will serve only to harm investors. It is now all the more important that the SEC step in to fill the void,” he said.

“As for my Securities Division Scottrade matter, it will go forward.”

Galvin said that the SEC’s Regulation Best Interest for brokers, as currently drafted, “falls so far short of the fiduciary standard set out in the Labor rule,” and added that he hopes the agency “can be persuaded to re-draft and mandate a true fiduciary standard that investors deserve.”

Lawyers representing Galvin told the U.S. District Court for the District of Massachusetts on June 11 that Galvin’s case against Scottrade for violating the Labor Department’s fiduciary rule should not be heard in federal court because a securities firm’s “violation of its own policies has long been a basis for liability” under state law, regardless of the complaint’s fiduciary rule references.

Galvin and Scottrade have been battling over whether the case should be heard in federal court. Galvin is seeking to have it heard in state court.

Attorney’s representing Scottrade retorted in their Friday filing that the U.S. District Court for the District of Massachusetts has jurisdiction over the case because Galvin “is suing to enforce the federal standards set forth in Labor’s fiduciary rule.

“Plaintiff’s [June 11] reply pretends otherwise, ignoring the 39 references to the Rule … and the fact that the only violations alleged therein are of the standards established by the Rule,” the Scottrade attorneys wrote.

“Plaintiff alleges violations by Scottrade of a policy it adopted only because the Rule required it and that tracks the Rule’s language verbatim,” the Scottrade attorneys said.

Galvin “also asks this court to close its eyes and ignore Plaintiff’s many public admissions that he is bringing this action to enforce the fiduciary rule because the federal government will not.”

In short, the Scottrade attorneys state, Galvin’s “reply amounts to little more than repeating the legally meritless assertion that his [administrative complaint] AC consists of a ‘state law’ claim,” adding that Galvin’s motion to remand the case to state court should be denied.