Galvin Floats Tougher Standard for Mass. Broker-Dealers: John Sten in Boston Business Journal
Secretary of the Commonwealth William F. Galvin, who is also the state’s top securities regulator, said that he may impose a higher legal standard on broker-dealers in Massachusetts if the U.S. Securities and Exchange Commission does not crack down on the companies.
The SEC proposes holding broker-dealers to a new “best interest” standard in dealings with investors, requiring broker-dealers to “act in a retail customer’s best interest when recommending securities or investment strategies.” Currently, broker-dealers are held to a lower standard known as “the suitability standard.”
But Galvin and others want broker-dealers held to what’s known as “fiduciary standard,” which that they say offers the most protection to investors. And if the SEC doesn’t take this action, Galvin is suggesting that Massachusetts “may be forced to act itself.”
Pierce Atwood partner John Sten, a trial lawyer who focuses his practice on securities litigation and white collar defense, states that, “Galvin may draw a legal challenge from a broker-dealer or industry group if he made such a proposal.” Sten added, “A Massachusetts-specific standard would also prove a logistic challenge to companies that do business with investors all over the country.”