Two of the nation’s top brokerage firms — Morgan Stanley and TD Ameritrade — are warning the Nevada Securities Division that if the state moves ahead with its fiduciary rule in its current form, they’ll stop serving customers in the state.
Meanwhile, Illinois appears to have halted moving ahead with its Investment Advisor Disclosure Act, which was introduced last year without any text. The act “has been designated session sine die,” according to George Michael Gerstein with Stradley Ronon, meaning it has not been assigned a “further meeting or hearing.”
Morgan Stanley told the Nevada Securities Division in its comment letter that its proposal “unnecessarily expands” the fiduciary duty described in Nevada’s Revised Statutes and that “‘episodic’ and ‘unsolicited transaction’ exemptions in their current form are far too narrow for firms to continue to offer Nevada investors cost-effective brokerage options.”
Without “substantial” changes to the state’s plan, Morgan Stanley said it would be “unable to provide brokerage services” to Nevada residents.
As of January, Morgan Stanley said that it had more than 28,000 clients in Nevada representing more than $28 billion in client assets.
Nevada’s Legislature passed its own fiduciary statute for securities in 2017; however, the law couldn’t be implemented until regulations were put into place. The comment period on Nevada’s proposed regs expired on March 1.
Erin Houston, deputy secretary of state for securities and the securities administrator for the Nevada Securities Division, told ThinkAdvisor in a Monday email message that “we are currently considering all of the comments we have received and will likely set another workshop prior to the adoption of the regulations.”
Houston added that “we do not have a date certain” on when the regs would be adopted.
TD Ameritrade Institutional said that it “strongly” encouraged Nevada to wait on adopting its fiduciary-related rules until the Securities and Exchange Commission’s Regulation Best Interest is finalized.