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PSCA Executive Reports

December 23, 2019

Massachusetts’ Fiduciary Rule

Following a preliminary comment period, Massachusetts Secretary of State’s office has published the state’s proposed fiduciary standard. A redline comparing the preliminary draft to the proposed version and a clean version are both available on the office’s website. Secretary of State William Galvin (D) said it was necessary for the state to issue its own rule, citing ambiguity in the federal rule’s language. The Massachusetts rule would “deem it…unethical or dishonest…for a broker-dealer, agent, investment adviser, or investment adviser representative…in Massachusetts to fail to act…with a fiduciary duty to any…client” and would clarify that the state’s existing suitability rule still applies to transactions excluded from this fiduciary rule. Fortunately, the proposal continues to exclude fiduciaries to ERISA plans, participants and beneficiaries from coverage under the state standard. This ERISA exemption was included in the preliminary proposal that was circulated for public comment back in June (which has now been superseded by the December 2019 fiduciary conduct standard proposal). A hearing on the proposed rule is scheduled for January 7, 2020 and comments are due by then.


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