Massachusetts’ Secretary of the Commonwealth, William Galvin, is taking on Robinhood for violating Massachusetts’ new fiduciary duty rule for broker-dealers. In December 2020, Galvin filed a 24-page regulatory complaint, seeking to ban the popular trading app for violating the State’s strict fiduciary duty rule that requires broker-dealers to act in the best interest of their clients. Galvin raised three different violations against Robinhood that allegedly fell short of the new strict fiduciary standard. This new rule, passed in February 2020, was created in response to the Securities and Exchange Commission’s Regulation Best Interest (Reg BI), which Massachusetts believed did not go far enough. Reg BI bars brokers from putting their own financial interest above those of their clients, but fails to define what it means to act “in the customers’ best interest” or mandate that brokers recommend a single best product. While Reg BI requires the disclosure and mitigation of conflicts of interest, Massachusetts felt this requirement was also lacking. Galvin stated that Reg BI is “basically a souped-up version of the suitability standard,” and felt a new State rule was necessary to protect the growing crowd of young investors in the State. During this past year, due to COVID-19 and other meme-based investment activities on the application, Robinhood accumulated over 3 million new users in the first four months of 2020. Galvin’s concerns revolve around the 500,000 customers in Massachusetts, with accounts totaling over $1.6 billion.
New York Insurance Regulation 187 Found Unconstitutional: Now What? A Faegre Drinker Podcast
On April 29, 2021, the State of New York Supreme Court Appellate Division in the Third Judicial Department issued an Opinion and Order finding that the amendment to New York Insurance Regulation 187 was unconstitutionally vague. In this Faegre Drinker podcast, a cross-disciplinary team of our attorneys discusses the preliminary implications of this important decision.
Broker-Dealer Regulation & Litigation Digest – Spring 2021
The Broker-Dealer Regulation & Litigation Digest is a periodic compilation of the most read blog posts published on the Broker-Dealer Law Blog during the last few months. Here you can catch up on what you missed or re-read these popular post.
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