The Massachusetts Supreme Judicial Court ruled Friday to uphold the Massachusetts fiduciary rule and allow Secretary of State William Galvin's administrative case against Robinhood to move forward.
In April, Galvin, Massachusetts' top securities regulator, appealed a Superior Court judge's decision issued last March that struck down the state's fiduciary rule.
In its ruling, issued Friday, the Massachusetts Supreme Judicial Court stated that the case "concerns the question whether, by promulgating the fiduciary duty rule, the Secretary overstepped the bounds of the authority granted to him under [Massachusetts Uniform Securities Act] MUSA. We conclude that he did not."
The court added that the state's fiduciary duty "rule does not override the common-law protections available to investors, that MUSA is not an impermissible delegation of legislative power, and that the rule is not preempted by the Securities and Exchange Commission's (SEC) determination to impose a national 'best interest' standard of care on broker-dealers."
Galvin said Friday in a statement that he is "pleased and gratified that the Court has ruled that our Fiduciary Rule is an appropriate exercise of my authority under the Massachusetts Uniform Securities Act.
"This landmark decision affirms the fiduciary duty of brokers to their customers and vindicates the role of my Securities Division to principally, but aggressively protect investors and police broker-dealer misconduct," he explained.
