William Francis Galvin

Secretary of the Commonwealth

Contact: Debra O'Malley February 15, 2018

Telephone: 617-727-9180

Secretary of the Commonwealth William F. Galvin today charged Scottrade Inc., a broker-dealer registered in the Commonwealth, with dishonest and unethical activity and failure to supervise. Galvin's office alleges that Scottrade, Inc. knowingly violated the firm's impartial conduct standard, which was adopted to comply with the Department of Labor's Fiduciary Rule.

The Fiduciary Rule mandates that all financial professionals who work with retirement plans or provide retirement planning advice act as fiduciaries, and are therefore legally and ethically bound to meet the standards of that status. To comply with the rule, which requires those who provide retirement investment advice to act in the best interest of their clients, Scottrade adopted a rule prohibiting sales quotas, appraisals, bonuses, contests, and other incentives for retirement or prospective retirement account clients.

The complaint, filed by Galvin's Securities Division today, alleges that despite the impartial conduct standard required by the Fiduciary Rule, Scottrade held at least two sales contests which included retirement assets after June 9, 2017, when the rule went into effect. The performance of agents who participated in the contests was tracked and appraised, and awards and incentives were given out in connection with retirement assets. The complaint alleges that these contests were in violation of the firm's impartial conduct rule and demonstrate a failure of the firm to make a good faith effort to comply with the Fiduciary Rule.

"Despite the efforts in Washington to kill the Fiduciary Rule, the impartial conduct provision remains in place," Galvin said. "If the Department of Labor will not enforce its own laws and rules, then the states must do what they can to protect retirees from firms who believe they can play with peoples' life savings by conducting sophomoric contests."

The complaint seeks a cease and desist order, censure, and an administrative fine.

 

(END) Dow Jones Newswires

February 15, 2018 10:32 ET (15:32 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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