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May 11, 2018 at 03:12 PM
Lawyers representing Scottrade told the U.S. District Court for the District of Massachusetts on Friday that the recent charge levied against the broker-dealer for violating the Labor Department’s fiduciary rule should be heard in federal court because Massachusetts Securities Regulator William Galvin is “overstepping his bounds by seeking to impose on Scottrade a federal duty that only he believes exists.”
Galvin, the attorneys argued in their 65-page filing, brought the action against Scottrade “to enforce the fiduciary rule because the federal government would not,” stating that his action “is part of his campaign to enforce his own, personal interpretation of this now-abolished federal rule, attempting unilaterally to substitute his judgment for that of Congress, federal regulators and the federal courts.”
Attorneys representing the Enforcement Section of the Massachusetts Securities Division, which claimed Scottrade violated the fiduciary rule, said in an April 13 filing that Scottrade’s attempts fail to satisfy terms of the removal statute in two separate respects.
First, the attorneys said, action by a state agency to enforce the Massachusetts Securities Act is not one “of which the district courts of the United States would have original jurisdiction … as even Scottrade itself does not contend that the Enforcement Section could have filed its action in this court.”
Moreover, the securities division’s action against Scottrade “was also not initially ‘brought in a State court,’ … but instead was filed within a state administrative agency,” the April 13 filing stated.
The Massachusetts Securities Division, headed by Galvin, charged Scottrade with violating the impartial conduct standards laid out in the Labor Department’s fiduciary rule, which took effect on June 9, 2017.
