Galvin Proposes Fiduciary Rule in Massachusetts

Galvin said his conduct standard "requires that financial recommendations and advice must be in the best interest of customers and clients, without regard to the interests of the broker-dealer, advisory firm and its personnel. The conduct standard is based on the common law fiduciary duties of care and loyalty."

Reg BI "fails to define the key term 'best interest,'" Galvin said, "and sets ambiguous requirements for how longstanding conflicts in the securities industry must be addressed under the new rule."

Reg BI also "fails to indicate whether some of the most problematic practices in the securities industry would be prohibited under the new rule."

For instance, while the SEC "indicated that sales contests limited to specific products or product types would be contrary to that rule, it did not indicate that broader-based sales contests or quotas would be contrary to its requirements," Galvin said.

"In many instances, it appears that the mitigation of conflicts required under the SEC Regulation Best Interest can be accomplished through disclosure, including disclosure via the new Customer Relationship Summary (Form CRS)."

A preliminary comment period will remain open until July 26.