The U.S. Chamber of Commerce urged William Galvin, Massachusetts’ top securities regulator, on Tuesday to extend the comment period on the state’s fiduciary proposal, as the revised plan raises “serious new legal and practical concerns.”
The Massachusetts Securities Division held a hearing Tuesday morning on its revised fiduciary rule, which Galvin, the Massachusetts secretary of state, signed off on in early December.
In comments to Galvin, the Chamber and four local chambers of commerce said an extended comment period would allow for a “more detailed analysis of some of the new issues raised” by the revised plan.
The comment period, which expires Tuesday, had a “very short deadline” of just over three weeks that coincided with “several federal and state holidays as well as significant religious and cultural celebrations,” which made “it difficult for the public to fully analyze the proposal and the impact it will have on the Commonwealth and its citizens,” the Chamber argued.
A spokesperson for Galvin’s office told ThinkAdvisor on Tuesday morning that the fiduciary rule will be approved and enacted after the division reviews all the testimony it receives and determines “if any changes are necessary.”
The law firm Baker McKenzie notes in a recent client alert that the Massachusetts proposal is an updated version of a pre-proposal originally circulated on June 14, 2019.
The new plan “will likely reduce investor access and choice,” the chambers of commerce argued. Also, they said, Massachusetts should not finalize its plan until the Securities and Exchange Commission’s Regulation Best Interest and Form CRS are implemented.
“These new SEC rules fundamentally change the duties and obligations of broker-dealers, significantly enhancing investor protection and preventing investor confusion,” the chambers state. “Unfortunately, in the Request for Comment document accompanying the revised Proposal, the Division again inaccurately describes the requirements of the new rules and incorrectly dismisses them as having little effect.”
The Massachusetts Securities Division “cannot properly assess the impact of Reg BI and Form CRS until the new protections are implemented, and broker-dealers and others develop and adopt new policies and procedures to comply,” the chambers state.
Finalizing its proposal “based on the Division’s assumptions and misperceptions about the rules, and on the Division’s desire to challenge the new Federal rules with a conflicting standard before the new Federal rules take effect, will result in unnecessary costs, confusion and harm for the Commonwealth’s investors,” the chambers said.
Ken Bentsen, president and CEO of the Securities Industry and Financial Markets Association, said his lobbying group was “very concerned that the proposal exceeds the state’s authority, will diminish investor access to advice, products and services and will increase investor costs.”
Bentsen, too, said Massachusetts should delay “any decision making until after Reg BI is fully implemented and the SEC, FINRA, and the Division and other state regulators have the chance to examine firms for compliance.”