William Galvin, Massachusetts' top securities regulator. William Galvin, Massachusetts’ top securities regulator.

Dissatisfied with the Securities and Exchange Commission’s just-finalized Regulation Best Interest, Massachusetts Secretary of State William Galvin, the state’s top securities regulator, introduced Friday a fiduciary rule proposal.

The Massachusetts Securities Division’s regulation would apply a fiduciary conduct standard on broker-dealers, agents, investment advisors and investment advisor representatives when dealing with their customers and clients.

“We are proposing this standard because the SEC has failed to provide investors with the protections they need against conflicts of interest in the financial industry, with its recent ‘Regulation Best Interest’ rule,” Galvin said.

“My Office has seen firsthand the serious financial harm that investors and savers have suffered as a result of conflicted financial advice,” he said. “Investors must come first.”

Galvin said his conduct standard “requires that financial recommendations and advice must be in the best interest of customers and clients, without regard to the interests of the broker-dealer, advisory firm and its personnel. The conduct standard is based on the common law fiduciary duties of care and loyalty.”

Reg BI “fails to define the key term ‘best interest,’” Galvin said, “and sets ambiguous requirements for how longstanding conflicts in the securities industry must be addressed under the new rule.”

Reg BI also “fails to indicate whether some of the most problematic practices in the securities industry would be prohibited under the new rule.”

For instance, while the SEC “indicated that sales contests limited to specific products or product types would be contrary to that rule, it did not indicate that broader-based sales contests or quotas would be contrary to its requirements,” Galvin said.

“In many instances, it appears that the mitigation of conflicts required under the SEC Regulation Best Interest can be accomplished through disclosure, including disclosure via the new Customer Relationship Summary (Form CRS).”

A preliminary comment period will remain open until July 26.