Wirehouses Morgan Stanley and Wells Fargo are among several brokerages threatening to cut down or eliminate their services in Nevada if the state goes through with its plans for a state-level fiduciary rule, according to news reports.

Nevada, along with New Jersey, Maryland and New York, has been taking steps to raise standards on investment professionals following the vacation of the Department of Labor’s fiduciary rule last year and in light of the SEC still working through its proposed Regulation Best Interest.

Critics of state-level initiatives have said such moves would create a patchwork of regulations that would cause a compliance nightmare for the industry.

The brokerages are now warning Nevada’s regulators they’ll take action if the secretary of state pushes through its initiative to hold brokers to the same best-interest standard that investment advisors are held to, according to Law360.com.

In dozens of comment letters reviewed by the legal news website, financial institutions are urging Nevada to wait for the SEC’s rule before enacting the state-level regulations. And some of them are more direct.

“Absent substantial changes to the [state] proposal, Morgan Stanley will be unable to provide brokerage services to residents of the state of Nevada,” Morgan Stanley said in its comment letter, according to Law360.com.

Wells Fargo, Charles Schwab, Edward Jones and TD Ameritrade say they would cut down on the number of investment options available in Nevada and limit access to investment information if the state-level rule goes live, the website writes.


In addition, the brokerages say costs would rise on the services that remain, according to Law360.com.

Lawyers specializing in securities regulation tell the website the pullout of services is certainly possible, but that they “have reason to doubt the sincerity of the messaging,” the website writes.

A representative for the state declined comment to Law360.com while all the brokerage firms either declined comment or didn’t respond to the website’s requests.