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Scottrade Pushes Back on Galvin’s Fiduciary Rule Case

May 14, 2018

The battle rages on between Massachusetts’ top securities cop William Galvin and Scottrade over allegations that the firm violated the Department of Labor’s fiduciary rule when it allowed certain sales contests. Scottrade’s most recent salvo accuses Galvin of “overstepping his bounds by seeking to impose on Scottrade a federal duty that only he believes exists,” according to ThinkAdvisor.

In a 65-page document filed Friday in the U.S. District Court for the District of Massachusetts, Scottrade’s lawyers continue arguing that Galvin had brought the case against Scottrade “to enforce the fiduciary rule because the federal government would not,” the publication writes, citing the filing.

The rule, which purports to require retirement account advisors to put clients’ interest first and went only into partial effect in June, was vacated by an appeals court in March. While industry lawyers say parts of the rule technically remain in effect, the DOL has made it abundantly clear it would not pursue violations.

Also in March, Scottrade argued Galvin was trying to enforce the DOL’s rule and requested the case’s removal to federal court.

In last week’s filing, Scottrade’s lawyers continued arguing that the case should be handled in federal court, according to ThinkAdvisor.

Galvin’s action, the lawyers say,“is part of his campaign to enforce his own, personal interpretation of this now-abolished federal rule, attempting unilaterally to substitute his judgment for that of Congress, federal regulators and the federal courts,” the publication writes.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.