The Bay State’s Securities Division of the Office of the Secretary of the Commonwealth has formally released new proposed fiduciary conduct standards for broker-dealers, agents, investment advisers and investment adviser representatives – but how does it view ERISA’s fiduciary standard?
The Massachusetts Securities Division would deem it an unethical or dishonest conduct or practice for a broker-dealer, agent, investment adviser or investment adviser representative registered or required to be registered in Massachusetts to fail to act in accordance with a fiduciary duty to any customer or client. The new rules also make clear that the existing suitability standard still applies to any relationships expressly excluded from the fiduciary standard.
Fortunately, the proposal continues to appropriately exclude fiduciaries to ERISA plans, participants and beneficiaries from coverage under the state standard. This ERISA exemption was including in the preliminary proposal that was circulated for public comment back in June (which has now been superseded by the December 2019 fiduciary conduct standard proposal).
The American Retirement Association provided comments to the Massachusetts Securities Division in July highlighting that ERISA already provides a uniform body of benefits law and regulations that protect participants and beneficiaries from impermissible conflicts of interest and expressed support for the exclusion of ERISA fiduciaries from the application of the proposed regulation.
What’s next? Dates for the hearing and comment period on the proposed regulations will be announced at a later time. But based upon a posted schedule on the Secretary’s website, it would appear that formal rule proposals submitted by Nov. 29, 2019 will be published on Dec. 13, 2019.
The Massachusetts regulation manual requires 21 days’ advance notice of a public hearing. So the earliest a public hearing can take place would be Jan. 3, 2020.
Andrew Remo is the American Retirement Association's Director of Legislative Affairs.
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