It has taken the entirety of the president’s term, but the Trump Administration has at last done a real number on the fiduciary rule. As with so much with Trump and his lackeys, it’s more about posturing than anything: Those supposed to benefit from the rollback say they won’t use it, and it’s taken so long that by the time it actually goes into effect Joe Biden will be president and having his people rewrite it to look something more like it looked back when he was vice president and it came into being in the first place.

What’s more, states have stepped in to fill the gap. States such as Massachusetts. And you can be sure that if you give Secretary of the Commonwealth Bill Galvin a new law with which to bludgeon the financial services industry, he’ll do so. Especially if the object of the bludgeoning has proven itself of richly deserving thereof.

Robinhood exposed Massachusetts investors to “unnecessary trading risks” by “falling far short of the fiduciary standard” adopted this year that requires broker-dealers to act in their clients’ best interest, the state said….

The accusations from Massachusetts center on the tactics that the company uses to keep customers engaged, claiming that it “encourages customers to use the platform constantly” through what it calls “gamification.” The complaint alleges that, through the promise of free stocks, push notifications and its signature digital confetti, Robinhood encourages “continuous and repeated engagement with its application….” It also alleges Robinhood violated its own rules regarding options trading by approving customers to engage in the practice without having the necessary qualifications…. It also addresses the recent outages Robinhood experienced that sidelined traders from accessing their accounts at different points this year….

The complaint marks Mr. Galvin’s first enforcement action of the rule.

Massachusetts Regulators File Complaint Against Robinhood [WSJ]
Labor Department Finishes Fiduciary Rule for Retirement Plans [WSJ]

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