Massachusetts Files First-Of-Its-Kind Action Concerning The Massachusetts Fiduciary Rule: Initial Considerations For Broker-Dealers and FinTech Firms

In February 2020, the Massachusetts Securities Division (the “MSD”) adopted a first-in-the-nation state fiduciary duty rule applicable to broker dealers and broker-dealer agents. Now, roughly three months after enforcement of the Fiduciary Rule began, the MSD has filed its first enforcement action, In the Matter of: Robinhood Financial, LLC (Docket No. E-2020-0047) (the “Administrative Complaint”). The Administrative Complaint represents an ambitious first step by the MSD which may have significant impact on the financial services industry including FinTech operators. While the Administrative Complaint consists only of allegations, a deeper assessment of the allegations, as well as the nuances of the Fiduciary Rule, presents important takeaways for broker-dealers and agents registered in Massachusetts.