Benefits Partner Josh Lichtenstein Widely Quoted on Scottrade Complaint

In The News
February 23, 2018

The Wall Street Journal, WSJ Pro Financial Regulation, Law360, IFLR and InvestmentNews reported that the Enforcement Section of the Massachusetts Securities Division charged Scottrade Inc. with violating the Labor Department’s fiduciary rule, which became effective on June 9, 2017. The articles, published on Feb. 15, include a statement from tax & benefits partner Josh Lichtenstein.

Mr. Lichtenstein stated:

“The complaint filed by the Enforcement Section of the Massachusetts Securities Division may mark the start of a new chapter in the saga of the DOL’s fiduciary rule. This complaint alleges that Scottrade failed to comply with provisions of its compliance manuals that it added to facilitate compliance with the DOL’s fiduciary rule, and that by failing to comply with those provisions, it was not “working diligently and in good faith” to comply with the fiduciary rule. There are a number of questions that will need to be resolved following the filing of this action, but the Securities Division’s action reinforces the importance of ensuring that compliance policies adopted in connection with the fiduciary rule are actually followed by institutions and their financial advisors. The filing also serves as a reminder that institutions should review their procedures to ensure that they are appropriate for complying with the rule as it stands during the current transition period.”

A follow up article published by Law360, Mr. Lichtenstein discusses the impact of the complaint. "This isn't a state regulator enforcing the fiduciary rule. A state regulator doesn't have the ability to enforce the fiduciary rule. It's a state regulator stepping in and saying we are going to seek protections for investors under existing state rules," Lichtenstein explains. In an ensuing piece published by InvestmentNews, Mr. Lichtenstein discusses which states are most likely to bring DOL-related cases.