Scottrade in Atlanta. (Photo: John Disney/ALM)
While the scheduling order for the Massachusetts state administrative hearing in the case against Scottrade for violating the U.S. Labor Department's fiduciary rule has been set for 2019, Scottrade attorneys have requested that an independent officer hear the case.
Nathaniel Gorton, the U.S. district judge for the U.S. District Court for the District of Massachusetts, who was presiding over the case brought by Secretary of State William Galvin against Scottrade, remanded the case back to a state administrative proceeding — as Galvin requested — last August.
Gorton stated in his Aug. 16 ruling that the Employee Retirement Income Security Act "does not completely pre-empt either claim in the administrative complaint and neither claim 'arises under' ERISA. This court lacks subject matter jurisdiction and plaintiff's motion to remand will be allowed."
During a Dec. 28, 2018, pre-hearing conference, Scottrade attorneys requested that an independent hearing officer be appointed to hear the case instead of attorney Laurie Flynn, who will act as the presiding officer appointed by the Director of the Massachusetts Securities Division — a Galvin appointee.
Citing news articles, Scottrade attorney Christian Bartholomew stated during the pre-hearing that Galvin has "prejudged" the case against Scottrade.
Galvin "has said there is a violation, and there just simply can't be any question that those kinds of comments at a minimum create an appearance of partiality that unfortunately reflects upon the entire MSD and Your Honor," Bartholomew stated to Flynn during the pre-hearing.
