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Mass. secretary of state finalizes broker-dealer conduct regulations

Resisting calls to delay his plan, Massachusetts Secretary of State William F. Galvin on Feb. 21 filed new regulations affecting broker-dealers in the state.

Galvin, in a press release, said the new fiduciary conduct standard regulations, which will take effect March 6, will “provide stronger protections for Massachusetts investors, by imposing a heightened duty of care and loyalty on broker-dealers and agents.” He had signed off on a proposed standard in November.

The rule will require broker-dealers and broker-dealer agents to provide investment advice and recommendations without regard to any interests but those of the customer.

“This standard will protect Massachusetts retirees and their hard-earned retirement savings from conflicted investment advice, which has been shown to cost investors billions of dollars each year,” Galvin said.

On Feb. 12, a bipartisan group of 25 state lawmakers sent Galvin a letter asking him to hold off on the new standard until a new U.S. Securities and Exchange Commission rule regulation becomes effective in June.

Echoing concerns raised during a January public hearing, the legislators wrote that they support the regulations’ objectives but “have heard from numerous constituents who fear the Proposal goes too far and will have harmful unintended consequences to investors.”

“We are particularly concerned that this could limit brokerage services and increase costs for the same low and middle income Massachusetts investors the proposal intends to protect,” the letter said. “The brokerage model is vital to these investors, many of whom do not want or need more costly advisory services.”

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