Massachusetts is showing no patience for the Regulation BI and is imposing its own fiduciary standard on investment advice in the Bay State. The standard goes into effect when published on March 6, with enforcement coming into play on September 1.
The standard in 950 CMR 12.207 will apply to any broker-dealer or agent in Massachusetts. The original proposal included investment advisers and investment adviser representatives. But according to the Adopting Release, the final regulation excluded them because they are already subject to a fiduciary standard.
For broker-dealers, the fiduciary standard extends past the recommendation requirement standard if the broker-dealer has discretionary authority over the account, has an agreement to monitor the account or receives ongoing compensation.
Sources:
- Adopting Release to Amendments to Standard of Conduct Applicable to Broker-Dealers and Agents – 950 MASS. CODE REGS. 12.200
- Proposed Regulation, as amended (redline) (PDF)