FOR IMMEDIATE RELEASE 3-21-2023
CONTACT: Burt Peretsky, <firstname.lastname@example.org>, 781-696-5579
NELF’s Amicus Brief Argument Follows its Mission to Advance Limited Government Based on the Rule of Law
BOSTON – In line with its mission to prevent regulatory overreach and to advance free enterprise, the New England Legal Foundation (NELF – www.newenglandlegal.org) has filed an amicus brief in the Massachusetts Supreme Judicial Court (SJC) case, Robinhood Financial, LLC vs. William F. Galvin & Others, saying that the Secretary of State was wrong in applying his own “Fiduciary Duty Rule” on Robinhood Financial and arguing that by doing so, William Galvin also pre-empted US Securities and Exchange Commission (SEC) regulations.
According to NELF Senior Staff Attorney Ben Robbins, who wrote the friend-of-the-court brief, “At issue [in this case] is whether the Secretary of the Commonwealth, William F. Galvin, had the authority, under either Massachusetts or federal law, to promulgate … a detailed regulation that imposes strict duties of care and loyalty on broker-dealers whenever they make an investment recommendation to Massachusetts customers.”
Citing a 2001 SJC decision in Patsos v. First Albany Corp., the NELF brief points out that the Court earlier held that a stockbroker does not owe a customer “strict fiduciary duties” unless the customer has given the broker “discretionary trading authority” over the customer’s account, “meaning that the customer entrusts the broker to select and execute most if not all of the transactions without necessarily obtaining prior approval for each transaction.” NELF argued that the “Fiduciary Duty Rule” is invalid in this case, because it “displaces the Massachusetts Supreme Judicial Court’s markedly different treatment of a broker-dealer’s duties … without any Legislative authorization.”
NELF President Dan Winslow commented, “The SEC is more than capable of regulating US business with standards that are applied equally to all companies. To have state regulators from all 50 states inject themselves into the SEC’s jurisdiction would create impossible roadblocks to national companies seeking to create value and jobs. NELF is pleased to support limits on state government overreach.”