Massachusetts’ fiduciary proposal is “very similar” to the one floated by New Jersey and may indicate that “an emerging model of regulation with respect to uniform standards of conduct is afoot,” according to members of Stradley Ronon’s Fiduciary Governance Group.
The Stradley Ronon attorneys argue in a just-released legal alert that such a model regulation “would be a double-edged sword in that it would result in less variance among the state approaches to standards of conduct, while also magnifying the scope and interpretive issues of, and preemption issues related to, the New Jersey proposal.”
Secretary of State William Galvin, the state’s top securities regulator, released Friday the state’s plan, which would apply a fiduciary conduct standard on broker-dealers, agents, investment advisors and investment advisor representatives when dealing with their customers and clients.
The Massachusetts’ proposal is the first formal state response to the Securities and Exchange Commission’s Regulation Best Interest for brokers, and the securities regulator’s advice-standards package, which the agency passed on June 5.
George Michael Gerstein, an attorney with Stradley Ronon and a member of the Fiduciary Governance Group, told ThinkAdvisor in a Tuesday email that while it’s too early to tell if more states will join Massachusetts, “we may start to see the early movers [states] coalesce around an [fiduciary] approach, as we appear to be seeing with New Jersey and Massachusetts.”
In releasing the Massachusetts plan, Galvin said “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.”
Meanwhile, New Jersey announced that it plans to hold hearings on its uniform fiduciary standard on Wednesday and has extended the comment period on its fiduciary rule to July 18.
Comments are due on Massachusetts’ plan by July 26.