Letters

MA Proposed Regulations – Fiduciary Conduct Standard

Summary

SIFMA provides comments to the Massachusetts Securities Division on the Massachusetts Securities Division’s Proposed Fiduciary Conduct Standard for Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives dated December 13, 2019.

See related joint industry letter and SIFMA testimony.

PDF

Submitted To

Massachusetts Securities Division

Submitted By

SIFMA

Date

7

January

2020

Excerpt

Via e-mail: [email protected]

January 6, 2020

The Honorable William Francis Galvin
Office of the Secretary of the Commonwealth
Attn: Proposed Regulations – Fiduciary Conduct Standard
Massachusetts Securities Division
One Ashburton Place, Room 1701
Boston, MA 02108

Dear Secretary Galvin:

The Securities Industry and Financial Markets Association (“SIFMA”)1 is a national trade association which brings together the shared interests of more than 350 large, medium and small broker-dealers, investment banks and asset managers comprising more than 75% of market share and 50% of assets under management (AUM). Our members serve millions of retail and institutional clients in every state, including Massachusetts. Virtually all of our members serving retail clients do so both as a broker-dealer (BD) under the Securities Exchange Act of 1934 (’34 Act) and as an investment adviser (IA) under the Investment Advisers Act of 1940 (’40 Act).

The U.S. securities industry plays an active and vital role in Massachusetts. The industry proudly employs 45,000 people in the state and is responsible for another 52,000 jobs.2 In 2019, it underwrote more than $40 billion in municipal and corporate bonds and $13.25 billion in equity offerings – including $1.78 billion in initial public offerings.3 The industry also managed well more than $580 billion in assets4 for state residents and institutional clients and helped residents save for college through a state-run 529 plan.

We appreciate the opportunity to further comment on the Massachusetts Securities Division’s (the “Division’s”) Proposed Fiduciary Conduct Standard for Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives (“Proposal”) dated December 13, 2019. As you know, SIFMA submitted comments5 in July of 2019 on the Preliminary Solicitation of Public Comments: Fiduciary Conduct Standard for Broker-Dealers, Agents, Investment Advisers, and Investment Adviser Representatives (“Preliminary Proposal”).6 The Proposal unfortunately does not remedy many of the concerns we and other commenters previously raised. We respectfully reiterate our interest in meeting with the Division to more fully discuss our concerns before you make the decision to finalize a state-specific fiduciary rule.

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1 SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate for legislation, regulation and business policy, affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. For more information, visit www.sifma.org.
2 According to the U.S. Department of Labor Bureau of Economic Analysis Input-Output Modeling System (RIMS II), each job in the securities industry in Massachusetts translates to 2.17 jobs statewide.
3 Refinitiv (2019).
4 Discovery Data (2019). This is a conservative estimate based on voluntarily reported information with only 28% of advisers reporting.