In a pivotal move, Massachusetts’ Supreme Judicial Court stood firm on Friday, championing a groundbreaking fiduciary rule. This rule equates broker-dealers, like Robinhood LLC, to investment advisers in terms of standards – an unprecedented shift that has the industry buzzing.
Strict Fiduciary Duty For Robinhood: Reversing the Winds
Overturning a prior lower court decision, the unanimous verdict rejected the assertion that Commonwealth Secretary William Galvin overreached by introducing this revolutionary rule in March 2020.
The analogy is akin to watching the pendulum swing back, with a force that underscores the importance of protecting investors in this digital age.
Galvin’s Broad Brush of Authority
The Massachusetts Uniform Securities Act (MUSA) paints a clear picture of Galvin’s extensive powers, aimed at “protecting investors” at his discretion.
Justice Dalila A. Wendlandt, penning for the court, emphasized, “Galvin adroitly adapted the standard of care, mirroring the evolving roles of new-age broker-dealers, whose business models often stray from traditional pathways.”
The Tug of War Between Galvin and Robinhood
In a tale reminiscent of David and Goliath, Galvin initiated an administrative action, pointing fingers at Robinhood for potentially sidestepping his enhanced fiduciary rule.
