Case Title: Robinhood Financial LLC v. Secretary of the Commonwealth

Citation: 

Docket Number: SJC-13381

State: massachusetts

Court: Massachusetts Supreme Court

Date: 2023-08-25T00:00:00Z

Document:
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SJC-13381 
 
ROBINHOOD FINANCIAL LLC  vs.  SECRETARY OF THE COMMONWEALTH & 
another.1 
 
 
 
Suffolk.     May 3, 2023. - August 25, 2023. 
 
Present:  Gaziano, Lowy, Cypher, Wendlandt, & Georges, JJ. 
 
 
Securities.  Broker.  Investment Advisor.  Fiduciary.  Secretary 
of the Commonwealth.  Regulation.  Common Law.  
Constitutional Law, Delegation of powers, Separation of 
powers, Federal preemption.  Federal Preemption.  Uniform 
Securities Act. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
April 15, 2021. 
 
 
The case was heard by Michael D. Ricciuti, J., on motions 
for judgment on the pleadings. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
Phoebe Fischer-Groban, Assistant Attorney General, for the 
defendants. 
Amy Mason Saharia (John S. Williams, of the District of 
Columbia, Timothy P. Burke, & Jason S. Pinney also present) for 
the plaintiff. 
The following submitted briefs for amici curiae: 
 
 
1 Securities Division of the Office of the Secretary of the 
Commonwealth. 
2 
 
Ben Robbins & Daniel B. Winslow for New England Legal 
Foundation. 
Shay Dvoretzky, of the District of Columbia, Eben P. Colby, 
& Marley Ann Brumme for Chamber of Commerce of the United States 
of America & another. 
Robert S. Banks, Jr., of Oregon, & William A. Jacobson for 
Cornell Securities Law Clinic. 
Timothy Cornell & Patrick J. Dolan for Public Investors 
Advocate Bar Association. 
Elizabeth Aniskevich & Benjamin Davis, of the District of 
Columbia, Stuart Rossman, & Shennan Kavanagh for AARP & others. 
Timothy Cornell & Patrick J. Dolan for Institute for the 
Fiduciary Standard & another. 
Dennis M. Kelleher for Better Markets, Inc. 
James F. Radke & Dylan White for North American Securities 
Administrators Association, Inc. 
 
 
 
WENDLANDT, J.  Unlike the fabled "Prince of Thieves," who 
took from the rich to give to the poor,2 the plaintiff Robinhood 
Financial LLC (Robinhood), is accused by the Secretary of the 
Commonwealth (Secretary) of taking advantage of unsophisticated 
investors to fill its own coffers by dispensing ill-suited 
investment advice to these customers and by encouraging them to 
engage in risky trading practices using its online trading 
platform.  This conduct, the Secretary alleges, violated the 
prohibition of the Massachusetts Uniform Securities Act, G. L. 
c. 110A (MUSA), against "unethical or dishonest conduct or 
practices in the securities, commodities[,] or insurance 
business," G. L. c. 110A, § 204 (a) (2) (G) -- a phrase that the 
Secretary has defined to require broker-dealers that provide 
 
 
2 Howard Pyle, The Merry Adventures of Robin Hood (1883). 
3 
 
investment advice to retail customers to comply with a 
statutorily defined fiduciary duty, see 950 Code Mass. Regs. 
§ 12.207(1)(a) (2020) (fiduciary duty rule or rule).  Unlike 
prior standards of care, which differentiated between broker-
dealers and investment advisers in view of their traditionally 
distinct investment services and offerings, the rule brings the 
fiduciary obligations of broker-dealers in line with those of 
investment advisers, making uniform the duties owed by those 
engaged in the business of providing investment advice 
regardless of label.  The rule, according to the Secretary, was 
needed to protect investors confused by the increasingly blurred 
line between broker-dealers providing investment advice and 
investment advisers. 
 
This case concerns the question whether, by promulgating 
the fiduciary duty rule, the Secretary overstepped the bounds of 
the authority granted to him under MUSA.  We conclude that he 
did not.  We further conclude that the fiduciary duty rule does 
not override the common-law protections available to investors, 
that MUSA is not an impermissible delegation of legislative 
power, and that the rule is not preempted by the Securities and 
Exchange Commission's (SEC) determination to impose a national 
"best interest" standard of care on broker-dealers, 17 C.F.R. 
4 
 
§ 240.15l-1 (2019) (Regulation Best Interest).3  We therefore 
reverse the judgment entered by a Superior Court judge on the 
pleadings in a civil action challenging the validity of the 
fiduciary duty rule, and we remand the matter for further 
proceedings. 
 
1.  Background.4  This appeal stems from an administrative 
enforcement proceeding brought by the Secretary against 
Robinhood, alleging that Robinhood violated MUSA by, inter alia, 
engaging in "unethical or dishonest conduct or practices in the 
securities, commodities[,] or insurance business," G. L. 
c. 110A, § 204 (a) (2) (G).  In particular, the Secretary 
alleged that Robinhood provided investment recommendations5 to 
 
 
3 We acknowledge the briefs of amici curiae AARP, AARP 
Foundation, and the National Consumer Law Center; Better 
Markets, Inc.; the Chamber of Commerce of the United States of 
America and the Greater Boston Chamber of Commerce; the Cornell 
Securities Law Clinic; the Institute for the Fiduciary Standard 
and Tamar Frankel; the New England Legal Foundation; the North 
American Securities Administrators Association, Inc.; and the 
Public Investors Advocate Bar Association. 
 
 
4 Because the case comes before us on the parties' cross 
motions for judgment on the pleadings, "[w]e recite the facts 
'drawn from the parties' pleadings and the exhibits attached 
thereto,'" Mullins v. Corcoran, 488 Mass. 275, 276 (2021), 
quoting Merriam v. Demoulas Super Mkts., Inc., 464 Mass. 721, 
723 (2013), reserving some facts for later discussion. 
 
 
5 The Secretary claimed that Robinhood encouraged "frequent, 
risky, and unsuitable trading" by "[i]nexperienced [i]nvestors," 
published investment categories like "100 Most Popular" or "Top 
Movers," and implemented "[s]trategies to [e]ncourage and 
[i]ncentivize" customer engagement with its trading platform; 
 
5 
 
its Internet-based6 customers without considering whether those 
recommendations were in each customer's best interest; this 
conduct, the Secretary contends, violated Robinhood's fiduciary 
duties of care and loyalty under the fiduciary duty rule.  
Robinhood denies the allegations, maintaining that, as a "self-
directed" brokerage firm, it does not make investment 
recommendations or provide investment advice.7 
 
After the Secretary initiated the administrative 
proceeding, Robinhood brought the instant action challenging the 
validity of the fiduciary duty rule.8  On the parties' cross 
motions for judgment on the pleadings, see Mass. R. Civ. P. 
12 (c), 365 Mass. 754 (1974), a Superior Court judge determined 
 
each such practice, the Secretary alleged, was tantamount to 
making investment recommendations to customers.  The 
administrative complaint also alleged that Robinhood "targeted 
young individuals with little or no investment experience; 
lacked adequate infrastructure and, as a result, experienced 
repeated outages and disruptions on its trading platform; . . . 
and failed to follow its own written supervisory procedures when 
approving customers for options trading." 
 
 
6 Robinhood provides its services on a mobile application 
and website-based trading platform, which, as of 2021, were two 
of the most common methods for placing trades.  See Lin, 
Bumcrot, Mottola, Valdes, & Walsh, FINRA Investor Education 
Foundation, Investors in the United States:  The Changing 
Landscape 10 (Dec. 2022). 
 
 
7 We address only the purely legal issues presented on 
appeal, which are unaffected by this dispute of material fact. 
 
 
8 In addition to 950 Code Mass. Regs. § 12.207(1)(a), 
Robinhood challenges the sections of Title 950 that refer to it. 
6 
 
that the Secretary acted ultra vires,9 exceeding his authority in 
promulgating the rule.  The Secretary appealed, and we allowed 
Robinhood's unopposed application for direct appellate review. 
 
2.  Regulatory framework.  A brief review of the regulatory 
framework for investment service providers grounds our analysis 
of Robinhood's legal arguments, which are rooted in the 
traditional differences between the investment services provided 
by broker-dealers and investment advisers, as well as the 
different standards of care that consequently have been 
applicable to each. 
 
a.  Investment services.  Historically, broker-dealers have 
offered services to facilitate and execute securities 
transactions chosen by their customers, earning commissions on 
these trades.10  At most, they have provided, free of any 
 
 
9 "Ultra vires," which is Latin for "beyond the powers 
(of)," describes actions that are "beyond the scope of power 
allowed or granted by . . . law."  Black's Law Dictionary 1833 
(11th ed. 2019).  "When an agency acts beyond the scope of 
authority conferred to it by statute, its actions are invalid 
and ultra vires."  Armstrong v. Secretary of Energy & Envtl. 
Affairs, 490 Mass. 243, 247 (2022). 
 
 
10 See G. L. c. 110A, § 401 (c) (defining broker-dealer as 
"any person engaged in the business of effecting transactions in 
securities for the account of others or for his own account").  
See also 15 U.S.C. §§ 77b(a)(12) (defining dealer as person who 
engages "in the business of offering, buying, selling, or 
otherwise dealing or trading in securities issued by another 
person"), 78c(a)(4)(A) (defining broker as person "engaged in 
the business of effecting transactions in securities for the 
account of others"). 
7 
 
additional fee, investment advice that was solely incidental to 
the effected transactions.11 
 
By contrast, investment advisers traditionally have 
provided ongoing investment advice, often taking the 
responsibility of continuous account management.12  Rather than 
charging a commission for each transaction, investment advisers 
usually charged a periodic fee calculated as a percentage of a 
customer's assets under management. 
 
As a result of the different investment services offered by 
each, Federal and State law historically have held broker-
dealers and investment advisers to different standards of care.  
Investment advisers, because of their trusted advisory role, 
generally must comply with the full complement of fiduciary 
duties of "utmost good faith, and full and fair disclosure of 
all material facts," and shoulder an "affirmative obligation to 
 
 
11 See Investment Advisers Act of 1940, 15 U.S.C. § 80b-
2(a)(11)(C) (Investment Advisers Act) (excluding broker-dealers 
from definition of investment adviser if their "performance of 
[investment advice] services is solely incidental to the 
conduction of [their] business as a broker or dealer" and if 
they "receive[] no special compensation therefor"); G. L. 
c. 110A, § 401 (m) (1) (F) (excluding registered broker-dealers 
from definition of investment adviser). 
 
 
12 See G. L. c. 110A, § 401 (m) (defining investment adviser 
as "any person who, for compensation, engages in the business of 
advising others, either directly or through publications or 
writings, as to value of securities or as to the advisability of 
investing in, purchasing, or selling securities").  See also 15 
U.S.C. § 80b-2(a)(11) (same). 
8 
 
'employ reasonable care to avoid misleading'" clients (citations 
omitted).  Securities & Exch. Comm'n v. Capital Gains Research 
Bur., Inc., 375 U.S. 180, 194 (1963).  See Investment Advisers 
Act of 1940, 15 U.S.C. § 80b-6 (Investment Advisers Act). 
 
Broker-dealers, because of their more limited role, have 
been subject to traditional agency principles when executing 
customers' transactions.  See, e.g., Hill v. Bache Halsey Stuart 
Shields Inc., 790 F.2d 817, 824 (10th Cir. 1986) (broker, as 
customer's agent, generally owed fiduciary duties, but scope of 
duties turned on nature of broker's responsibilities because 
agent is only fiduciary within scope of agency).  In addition, 
where a broker-dealer made a recommendation incidental to 
effecting a transaction, a broker-dealer must "have [had] a 
reasonable basis to believe that a recommended transaction or 
investment strategy involving a security or securities is 
suitable for the customer, based on the information obtained 
through the reasonable diligence of the [broker-dealer] to 
ascertain the customer's investment profile."  Financial 
Industry Regulatory Authority, Inc. (FINRA), FINRA rule 2111(a), 
https://www.finra.org/rules-guidance/rulebooks/finra-rules/2111 
[https://perma.cc/RCS4-4KKX] (suitability standard).13 
 
 
13 As discussed infra, a broker-dealer also is subject to 
common-law obligations of care, the precise contours of which 
 
9 
 
 
Over time, the once-clear dichotomy between the services 
offered by broker-dealers, on the one hand, and investment 
advisers, on the other, has "blurred."  XY Planning Network, LLC 
v. United States Sec. & Exch. Comm'n, 963 F.3d 244, 247 (2d Cir. 
2020).  Certain broker-dealers expanded the types of services 
and products they offered to retail customers, "often 
provid[ing] advice and mak[ing] recommendations about securities 
transactions and investment strategies."  Id. at 248.14  These 
broker-dealers also changed their marketing; "financial services 
firms began to use a variety of titles to describe their 
personnel, such as 'financial advis[er],' 'financial 
consultant,' and 'advis[er],'" Securities and Exchange 
Commission, Study on Investment Advisers and Broker-Dealers as 
Required by Section 913 of the Dodd-Frank Wall Street Reform and 
Consumer Protection Act 99 (Jan. 2011), https://www.sec.gov 
 
vary depending on the relationship between the broker-dealer and 
the client. 
 
 
14 See Laby, Selling Advice and Creating Expectations:  Why 
Brokers Should be Fiduciaries, 87 Wash. L. Rev. 707, 730 (2012) 
("The birth of electronic markets and the development of 
electronic trading[, which] automated much of the day-to-day 
enterprise of transaction execution without the use of [broker-
dealers]," led broker-dealers to enhance their services by 
providing advice, "tilt[ing] the balance of brokers' activity 
away from execution and toward advice").  See also Note, 
Regulation Best Interest and the State-Agency Conflict, 120 
Colum. L. Rev. 1591, 1597-1598 (2020) (detailing history of 
broker-dealers beginning to offer financial planning services in 
1980s and shifting from charging commission on trades to fee-
based pricing). 
10 
 
/news/studies/2011/913studyfinal.pdf [https://perma.cc/7THA-
E22R] (Section 913 study, discussed infra).15 
 
Additionally, some broker-dealers' compensation models 
morphed.  Rather than charging commissions, some broker-dealers 
draw revenue from "payments for order flow" -- "a method of 
transferring some of the trading profits from market making to 
the brokers that route customer orders to specialists for 
execution," Securities & Exchange Commission, Special Study:  
Payment for Order Flow and Internalization in the Options 
Markets (Dec. 2020), https://www.sec.gov/news/studies/ordpay.htm 
[https://perma.cc/PE6G-TS7G].16  Under this compensation model, a 
 
 
15 See Hauptman & Roper, Consumer Federation of America, 
Financial Advisor or Investment Salesperson?  Brokers and 
Insurers Want to Have it Both Ways 10-11 (2017), 
https://consumerfed.org/wp-content/uploads/2017/01/1-18-17-
Advisor-or-Salesperson_Report.pdf [https://perma.cc/FM53-Z988] 
("In addition to describing their financial professionals as 
advis[e]rs and describing their services as advisory in nature, 
sales-based firms also routinely use messaging that is designed 
to foster a relationship of trust and reliance," e.g., "Our 
clients always come first," and "Everything we are, do and hope 
to achieve . . . is driven by a straightforward mission:  To 
provide the best financial advice and service to our clients" 
[citations omitted]). 
 
 
16 Payments for order flow involve "a type of volume 
discount -- in either cash or in-kind services -- by which 
market makers (who actually execute securities transactions) 
reward brokers for having directed business to them."  Gilman v. 
BHC Sec., Inc., 104 F.3d 1418, 1420 (2d Cir. 1997).  See Note, 
Why Robinhood is Not a Fiduciary, 39 Yale J. Reg. 1445, 1469 
(2022) (under payment for order flow model, broker-dealer firms 
could be "engaged in the practice of skimming off the top of 
orders and giving users a higher price"). 
11 
 
broker-dealer's revenues are tied to the number of trades its 
customers execute, arguably providing an incentive to prefer 
third parties with the best rebate for the broker-dealer, see 
Gilman v. BHC Sec., Inc., 104 F.3d 1418, 1423-1424 (2d Cir. 
1997), over those with the best execution price for clients.17 
 
These industry transformations have made the securities 
markets more readily available to more investors;18 however, the 
changes also have caused consumer confusion and investor harm 
despite the existing suitability standard for broker-dealers, 
see Section 913 study, supra at 93-94.  As a result, Federal and 
State authorities have questioned whether adhering to the 
traditional dichotomy between the standard of care owed to 
customers by broker-dealers and investment advisers continues to 
make sense in this evolving marketplace.  See infra. 
 
b.  SEC's Regulation Best Interest.  Congress, for example, 
passed the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (Dodd-Frank), Pub. L. No. 111-203, § 913, 124 Stat. 1376, 
1824-1830 (2010), authorizing the SEC to promulgate a new 
standard of care for broker-dealers suitable to the evolving 
 
 
17 See Duggan, Forbes Advisor, Could the SEC End Payment for 
Order Flow? (Aug. 22, 2022), https://www.forbes.com/advisor 
/investing/payment-for-order-flow/ [https://perma.cc/K42K-64EW]. 
 
 
18 According to Robinhood, its business model has "created 
competition in the brokerage industry," increasing consumers' 
access to the investment market and causing other broker-dealers 
to eliminate commissions, a trend called the "Robinhood effect." 
12 
 
landscape and equal to "the standard of conduct applicable to 
. . . investment adviser[s] under . . . the Investment Advisers 
Act," Dodd-Frank § 913(g)(1), 124 Stat. at 1828.  It asked the 
SEC to consider whether, when providing investment advice to 
retail customers, broker-dealers should be required to "act in 
the best interest of the customer without regard to the 
financial or other interest of the [broker-dealer] providing the 
advice."  Dodd-Frank § 913(g)(2), 124 Stat. at 1828.  Congress 
also directed the SEC to conduct a study (Section 913 study) to 
evaluate "the effectiveness of existing legal or regulatory 
standards of care for [broker-dealers] . . . for providing 
personalized investment advice and recommendations about 
securities to retail customers" and to review "whether there are 
legal or regulatory gaps" in the existing regulatory scheme 
relating to such standards of care.  Dodd-Frank § 913(b), 124 
Stat. at 1824. 
 
The subsequent study confirmed that retail investors often 
"d[id] not understand the differences between investment 
advisers and broker-dealers or the standards of care applicable 
to broker-dealers and investment advisers"; information gathered 
regarding "investor understanding of the roles, duties[,] and 
obligations of investment advisers and broker-dealers . . . 
reflect[ed] confusion by retail investors regarding the roles, 
titles, and legal obligations of investment advisers and broker-
13 
 
dealers."  Section 913 study, supra at v.  In the Section 913 
study's findings, the authors recommended the adoption of a 
"uniform fiduciary standard . . . regardless of the regulatory 
label (broker-dealer or investment adviser) of the professional 
providing the advice [emphasis added]."  Id. at v-viii. 
 
The SEC stopped short of proposing a uniform standard.  
Instead, it proposed a general obligation on broker-dealers, 
requiring that 
"all broker-dealers . . . when making a recommendation of 
any securities transaction or investment strategy involving 
securities to a retail customer, act in the best interest 
of the retail customer at the time the recommendation is 
made without placing the financial or other interest of the 
broker-dealer . . . ahead of the interest of the retail 
customer" (general obligation). 
 
Regulation Best Interest, Release No. 34-83062, 83 Fed. Reg. 
21,574, 21,575 (May 9, 2018). 
 
In July 2019, the SEC adopted the Regulation Best Interest 
notwithstanding the Secretary's concerns that the general 
obligation would fail to protect investors who were confused by 
the differences between investment advisors providing investment 
advice and recommendations and broker-dealers who also gave 
investment advice and recommendations.19  See Regulation Best 
 
 
19 The Secretary criticized the proposed general obligation 
and urged the SEC instead to adopt a "strong uniform fiduciary 
standard" that would impose on broker-dealers a fiduciary duty 
to customers equal to that of investment advisers.  Secretary of 
the Commonwealth, Comment Letter on "Regulation Best Interest" 
 
14 
 
Interest, Release No. 34-86031, 84 Fed. Reg. 33,318, 33,329-
33,330 (July 29, 2019); 17 C.F.R. § 240.15l-1 (2019).  The SEC 
explained that the general obligation comprised four component 
parts:  (1) a "[d]isclosure obligation," requiring broker-
dealers to fully and fairly disclose, in writing, any material 
facts relating to the scope and terms of the relationship with 
the customer, including material conflicts of interest related 
to investment recommendations, prior to or at the time of the 
recommendation; (2) a "[c]are obligation," requiring broker-
dealers to exercise "reasonable diligence, care, and skill" when 
making a recommendation to a retail customer, including 
developing a "reasonable basis" to believe that a recommendation 
is in the "best interest" of a particular customer; (3) a 
"[c]onflict of interest obligation," requiring that broker-
dealers have and enforce written policies and procedures 
reasonably designed to identify, mitigate, and disclose 
 
Proposal, Release No. 34-83062, at 1 (Aug. 7, 2018).  "As a 
regulator," the Secretary wrote, he had "seen the grievous harm 
suffered by Main Street investors who mistakenly trusted and 
relied on conflicted investment advice [given by broker-
dealers]."  Id.  The proposed best interest standard for broker-
dealers, the Secretary continued, was "for all intents and 
purposes substantially the same as the current suitability 
standard," and, he predicted, it would "foster confusion and 
. . . fail to protect vulnerable investors."  Id. at 2.  "If the 
Commission [did] not adopt a strong and uniform fiduciary 
standard," the Secretary explained, "Massachusetts [would] be 
forced to adopt its own fiduciary standard to protect [its] 
citizens from conflicted advice by broker-dealers."  Id. at 1. 
15 
 
conflicts of interest, and to prevent conflicts that would cause 
them to make recommendations that place their own interests 
ahead of customers'; and (4) a "[c]ompliance obligation," 
requiring broker-dealers to adopt and enforce written policies 
and practices "reasonably designed to achieve compliance with" 
the Regulation Best Interest.  17 C.F.R. § 240.15l-1(a)(2)(i)-
(iv). 
 
c.  Fiduciary duty rule.  Responding to the SEC's decision 
not to apply a uniform standard, the Secretary published a 
preliminary solicitation for public comments on a proposed State 
"regulation to apply a fiduciary conduct standard on broker-
dealers, agents, investment advisers, and investment adviser 
representatives when dealing with their customers and clients."  
See Secretary of the Commonwealth, Securities Division, 
Preliminary Solicitation of Public Comments:  Fiduciary Conduct 
Standard for Broker-Dealers, Agents, Investment Advisers, and 
Investment Adviser Representatives (June 14, 2019) (Preliminary 
Solicitation for Public Comments).  He noted the "severe 
financial harm" investors had experienced despite the prior 
suitability standard, and he criticized the Regulation Best 
Interest for failing to define the key term "best interest," and 
setting "ambiguous requirements for how longstanding conflicts 
in the securities industry must be addressed."  Id. 
16 
 
 
A uniform fiduciary duty rule was necessary for the 
protection of Massachusetts investors and was in the public 
interest, the Secretary concluded, because investors often 
lacked the "education and background" to navigate the 
disclosures distinguishing between broker-dealers and investment 
advisers.  Preliminary Solicitation for Public Comments, supra.  
He relied on empirical studies demonstrating that some investors 
were "fundamentally confused about the differences between 
broker-dealers and investment advisers" when receiving 
investment advice.  Id. 
 
In December 2019, the Secretary issued a superseding 
request for comment on a revised draft rule, in which he 
reiterated that the fiduciary duty rule was necessary to protect 
investors because it would ensure that broker-dealers, who were 
increasingly "hold[ing] themselves out as providing[] trusted 
advice" to investors, would be held to the "same fiduciary 
standard as investment advisers when providing advice."  
Secretary of the Commonwealth, Securities Division, Solicitation 
of Comments on Proposed Fiduciary Conduct Standard for Broker-
Dealers, Agents, Investment Advisers, and Investment Adviser 
Representatives 2 (Dec. 13, 2019) (Solicitation of Comments).  
It would require broker-dealers to "make recommendations and 
provide advice based on what is best for the customer or client, 
without regard to the interests of any other person."  Id. at 5. 
17 
 
 
The Secretary also responded to concerns that imposing a 
fiduciary duty on broker-dealers would "effectively restrict 
investor choice and access to products and services by 
increasing the cost of advice."  Solicitation of Comments, supra 
at 3.  He explained that "[w]hen preserving 'choice' means 
preserving the option to choose opaque, poorly understood 
products that are sold via heavily conflicted advice, the 
benefits of such 'choice' are illusory."  Id.  He continued, 
"[t]here is no room for 'you get what you pay for' when it comes 
to the quality and integrity of investment advice."  Id. at 3-4.  
Moreover, he concluded that the fiduciary duty rule would 
"enhance[] the quality of advice in the transactional, episodic 
brokerage model without imposing any new ongoing obligations 
upon those providing it."  Id. at 4. 
 
In March 2020, the Secretary promulgated the fiduciary duty 
rule.  The rule deems it "unethical or dishonest conduct or 
practices" under G. L. c. 110A, § 204 (a) (2) (G), for a broker-
dealer to "fail[] to act in accordance with a fiduciary duty to 
a customer[20] when providing investment advice or recommending an 
 
 
20 The term "customer" is defined to exclude: 
 
"(a) [a] bank, savings and loan association, insurance 
company, trust company, or registered investment company; 
(b) [a] broker-dealer registered with a [S]tate securities 
commission . . . ; (c) [a]n investment adviser registered 
with the SEC under the Investment Advisers Act of 1940 
 
18 
 
investment strategy, the opening of or transferring of assets to 
any type of account, or the purchase, sale, or exchange of any 
security."  950 Code Mass. Regs. § 12.207(1)(a).21  The rule 
requires broker-dealers that provide investment advice to adhere 
"to duties of utmost care and loyalty to the customer," bringing 
their fiduciary obligations when providing investment advice 
more in line with the standards applicable to investment 
advisors.  950 Code Mass. Regs. § 12.207(2).  The "duty of 
care," the rule explains, requires "a broker-dealer or agent to 
use the care, skill, prudence, and diligence that a person 
acting in a like capacity and familiar with such matters would 
use, taking into consideration all of the relevant facts and 
circumstances."22  950 Code Mass. Regs. § 12.207(2)(a).  The 
 
§ 203 or with a [S]tate securities commission (or agency or 
office performing like functions); or (d) [a]ny other 
institutional buyer, as defined [by regulation]." 
 
950 Code Mass. Regs. § 12.207(3). 
 
 
21 Pursuant to 950 Code Mass. Regs. § 12.204(1)(a)(29), 
violation of 950 Code Mass. Regs. § 12.207 is "grounds for 
imposition of an administrative fine, censure, denial, 
suspension[,] or revocation of a registration, or such other 
appropriate action." 
 
 
22 To comply with the duty of care, broker-dealers "shall 
make reasonable inquiry," which requires consideration of "[t]he 
risks, costs, and conflicts of interest related to all 
recommendations made and investment advice given"; "[t]he 
customer's investment objectives, risk tolerance, financial 
situation, and needs"; and "[a]ny other relevant information."  
950 Code Mass. Regs. § 12.207(2)(a)(1)-(3). 
19 
 
"duty of loyalty" requires a broker-dealer or agent to 
(1) "[d]isclose all material conflicts of interest"; (2) "[m]ake 
all reasonably practicable efforts to avoid conflicts of 
interest, eliminate conflicts that cannot reasonably be avoided, 
and mitigate conflicts that cannot reasonably be avoided or 
eliminated"; and (3) "[m]ake recommendations and provide 
investment advice without regard to the financial or any other 
interest of any party other than the customer."  950 Code Mass. 
Regs. § 12.207(2)(b)(1)-(3).  "Disclosing conflicts alone does 
not meet or demonstrate the duty of loyalty."  950 Code Mass. 
Regs. § 12.207(2)(c). 
 
3.  Discussion.  a.  Standard of review.  "We review the 
allowance of a motion for judgment on the pleadings de novo."  
Mullins v. Corcoran, 488 Mass. 275, 281 (2021).  "In deciding 
the motion, all facts pleaded by the [party who did not prevail 
below] must be accepted as true."  Id., citing Jarosz v. Palmer, 
436 Mass. 526, 529-530 (2002).  "We . . . may rely on 'matters 
of public record, orders, items appearing in the record of the 
case, and exhibits attached to the complaint.'"  Mullins, supra, 
quoting Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000).  
Each issue on appeal is a question of law, likewise subject to 
de novo review.  See Fournier v. Secretary of the Exec. Office 
of Health & Human Servs., 488 Mass. 43, 50 (2021), citing 
20 
 
Guilfoil v. Secretary of the Exec. Office of Health & Human 
Servs., 486 Mass. 788, 793 (2021). 
 
b.  Secretary's authority under MUSA.  We turn first to 
Robinhood's contention that issuance of the fiduciary duty rule 
exceeded the Secretary's authority under MUSA because the rule 
upsets the long-standing regulatory framework described supra, 
pursuant to which broker-dealers traditionally were subject to a 
different standard of care from that applicable to investment 
advisers.  Our analysis begins with the recognition that "[d]uly 
promulgated regulations of an administrative agency are 
presumptively valid and 'must be accorded all the deference due 
to a statute.'"  Craft Beer Guild, LLC v. Alcoholic Beverages 
Control Comm'n, 481 Mass. 506, 520 (2019), quoting Pepin v. 
Division of Fisheries & Wildlife, 467 Mass. 210, 221 (2014).  
Accordingly, "[t]he burden of demonstrating invalidity rests 
squarely on the party challenging the regulation."  Craft Beer 
Guild, LLC, supra, citing Pepin, supra. 
 
Adopted in 1972, MUSA was designed to protect investors by 
regulating securities offerings in the Commonwealth.  Bulldog 
Investors Gen. Partnership v. Secretary of the Commonwealth, 460 
Mass. 647, 652, 655 (2011), cert. denied, 566 U.S. 987 (2012) 
(MUSA "largely tracks" Federal Securities Act of 1933, purpose 
of which was "to protect investors").  MUSA broadly authorizes 
the Secretary to administer the law, giving him extensive 
21 
 
investigative and enforcement powers.  See G. L. c. 110A, 
§§ 406 (a), 407-408.23  MUSA permits the Secretary to make rules 
that "are necessary to carry out the provisions of [MUSA]," 
including rules that "defin[e] any terms, whether or not used in 
[MUSA], insofar as the definitions are not inconsistent with the 
provisions of [MUSA]."  G. L. c. 110A, § 412 (a).  The 
authorization permits the Secretary discretion to establish 
regulations "necessary or appropriate in the public interest or 
for the protection of investors and consistent with the purposes 
fairly intended by the policy and provisions of [MUSA]."  G. L. 
c. 110A, § 412 (b).  See, e.g., Massachusetts Fed'n of Teachers, 
AFT, AFL-CIO v. Board of Educ., 436 Mass. 763, 773 (2002).24 
 
The broad-ranging authority evinces the Legislature's 
determination that the Secretary is best "suited to the task of 
clarifying the Legislature's plan through specific rules," 
 
 
23 The Secretary is delegated the authority to, for example, 
investigate and sanction misconduct under MUSA by broker-
dealers, including by issuing subpoenas and cease-and-desist 
orders, and levying fines or other sanctions.  G. L. c. 110A, 
§§ 204, 407, 407A. 
 
 
24 In Massachusetts Fed'n of Teachers, AFT, AFL-CIO, 436 
Mass. at 773, we recognized that a rulemaking delegation 
provision akin to MUSA's -- providing the Board of Education 
with the "authority to promulgate, amend[,] and rescind such 
rules and regulations as may be necessary to carry out the 
provisions of [the educator qualifications section of the 
Education Reform Act]," see id. at 768, quoting G. L. c. 71, 
§ 38G -- gave the agency broad authority to adopt regulations to 
fulfill the statutory mandate. 
22 
 
Goldberg v. Board of Health of Granby, 444 Mass. 627, 633-634 
(2005), and its conclusion that the Secretary, because of his 
"experience, technical competence, and specialized knowledge" is 
well positioned to address the program of reform at issue, Souza 
v. Registrar of Motor Vehicles, 462 Mass. 227, 229 (2012), 
quoting G. L. c. 30A, § 14 (7), which in the case of MUSA is 
investor protection, see Bulldog Investors Gen. Partnership, 460 
Mass. at 652, 655.  Relevant here, the "Legislature's silence" 
as to the particular "conduct or practice" deemed to be 
"unethical or dishonest" for purposes of an enforcement action 
under G. L. c. 110A, § 204 (a) (2) (G),25 coupled with the wide 
authorization given to the Secretary under MUSA, constitutes "an 
invitation to [the Secretary] to fill the gap with appropriate 
regulation."  McCauley v. Superintendent, Mass. Correctional 
Inst., Norfolk, 491 Mass. 571, 585-586 (2023), quoting 
Massachusetts Teachers' Retirement Sys. v. Contributory 
Retirement Appeal Bd., 466 Mass. 292, 301 (2013).  See, e.g., 
Purity Supreme, Inc. v. Attorney Gen., 380 Mass. 762, 771 (1980) 
 
 
25 Robinhood mistakenly asserts that the Secretary's 
definition of "unethical or dishonest conduct or practices" to 
include the failure to abide by the fiduciary duty rule is 
inconsistent with the dictionary definitions of those terms.  
See Black's Law Dictionary 790 (4th rev. ed. 1968) (defining 
"fraudulent or dishonest act" as one that "involves bad faith, a 
breach of honesty, a want of integrity, or moral turpitude"); 
id. at 1698 (defining "unethical" as "not according to business 
or professional standards"). 
23 
 
("The purpose of an open-ended legislative use of the words 
'unfair' and 'deceptive' [in G. L. c. 93A, the consumer 
protection statute] was to allow for the regulation [by the 
Attorney General] of future, as-yet-undevised, business 
practices"). 
 
Pursuant to this expansive authority, before adopting the 
fiduciary duty rule, the Secretary considered, inter alia, the 
Securities Division's enforcement experience, empirical studies, 
the Section 913 study and its recommendations, and public 
comments related to the relationship between broker-dealers and 
their customers.  See generally Solicitation of Comments, supra.  
Many investors, these sources highlighted, did not understand 
the different standards of care required of broker-dealers and 
investment advisers because of the increasingly blurred lines 
between the two as broker-dealers expanded their offerings, 
changed their marketing to the public, and moved to different 
compensation models.  Increasingly, investors mistakenly 
believed that the broker-dealers had a fiduciary obligation 
equal to investment advisers to act in their customers' best 
interests, as discussed supra, and this mistake resulted in 
investor harm.26  See Section 913 study, supra at v.  Indeed, the 
 
 
26 See A.A. Hung, N. Clancy, J. Dominitz, E. Talley, C. 
Berrebi, & F. Suvankulov, RAND Institute for Civil Justice,  
Investor and Industry Perspectives on Investment Advisers and 
 
24 
 
recommendation of the authors of the report following the 
Section 913 study, which conducted a comprehensive investigation 
at the national level, also was to impose a "uniform fiduciary 
standard" applicable to both broker-dealers and investment 
advisers, in order to best protect investors.  Id. 
 
As a result of the Secretary's investigation, he concluded 
that the fiduciary duty rule best ensured that MUSA's 
protections aligned with investors' expectations in the evolving 
investment landscape.  Accordingly, the Secretary determined 
that the fiduciary duty rule was necessary to fulfill MUSA's 
broad investor protection purpose, consistent with the 
Secretary's obligation to police "unethical or dishonest conduct 
or practices," pursuant to G. L. c. 110A, § 204 (a) (2) (G). 
 
i.  Industry norms.  Despite the authority given to the 
Secretary under MUSA, Robinhood maintains that, because MUSA 
proscribes "any unethical or dishonest conduct or practices in 
the securities, commodities[,] or insurance business" (emphasis 
added), G. L. c. 110A, § 204 (a) (2) (G), the Legislature 
implicitly adopted a standard of care limited to existing 
 
Broker-Dealers 115 (2008) ("the industry is becoming 
increasingly complex and intertwined and . . . investors do not 
operate with a clear understanding of the different functions 
and fiduciary responsibilities of their financial 
professionals"); id. at 113 (household investor study revealed 
that "the roles of broker-dealers and investment advisers are 
confusing to most survey respondents and focus-group 
participants"). 
25 
 
industry norms, which traditionally have treated broker-dealers 
differently from investment advisers as regards the standard of 
care owed to customers.  This argument fails to consider the 
extensive record relied on by the Secretary showing that the 
industry has strayed from the traditional model for the 
provision of investor services, as broker-dealers have changed 
their offerings, marketing, and compensation models.  See 
discussion supra. 
 
In response to this industry change and the resulting 
investor confusion and harm, the SEC already altered "industry 
norms," by imposing on broker-dealers increased fiduciary 
obligations under the Regulation Best Interest; and, concluding 
that those were insufficiently clear to address investor 
confusion, the Secretary adopted a uniform fiduciary duty rule.  
To be sure, the rule imposes an obligation on broker-dealers 
beyond that attendant to the prior suitability standard, see 
supra, and is clearer than the standard under Regulation Best 
Interest, which does not define "best interest."  But the rule 
is driven by changes in the prior "norms" of the marketplace 
that have caused investor harm, the Secretary found.27 
 
 
27 Contrary to Robinhood's argument, the fact that other 
State courts, in assessing the constitutionality of the phrase 
"unethical or dishonest conduct or practices" against charges of 
vagueness, construed "unethical or dishonest conduct or 
practices" through the lens of industry norms does not confine 
 
26 
 
 
Consistent with his extensive authority and the flexibility 
it necessarily portends, the Secretary permissibly adapted the 
standard of care required of these new-age broker-dealers, who 
have themselves adopted new business models inconsistent with 
their traditional roles and prior industry norms,28 to carry out 
his charge under MUSA to protect investors, see Marram v. 
Kobrick Offshore Fund, Ltd., 442 Mass. 43, 54 (2004) (MUSA has 
"consumer-oriented focus").  MUSA authorizes the Secretary to 
define the phrase "unethical or dishonest conduct or practices," 
so long as he does so consistent with the purpose of MUSA to 
protect investors; his determination that the fiduciary duty 
rule was necessary for that purpose is owed deference, where, as 
here, the conclusion is supported by the extensive regulatory 
 
the phrase to existing industry standards of care here, where 
the phrase is defined by regulation.  See, e.g., Brewster v. 
Maryland Sec. Comm'r, 76 Md. App. 722, 728-729 (1988); Johnson-
Bowles Co. v. Division of Sec. of the Dep't of Commerce of Utah, 
829 P.2d 101, 112 (Utah Ct. App. 1992). 
 
 
28 We disagree that the phrase "in the securities, 
commodities[,] or insurance business" suggests a Legislative 
intent to circumscribe the Secretary's authority to then-
existing industry norms.  Rather, the phrase specifies the 
relevant context to which the provision applies -- namely, "in 
the securities, commodities[,] or insurance business," and not 
in other types of businesses, as the drafters of the provision 
explained.  See L. Loss, Commentary on the Uniform Securities 
Act, draftsmen's commentary to § 204, at 32 (1976) (phrase 
"limited to dishonest and unethical practices in the securities 
business," not in "the myriad forms of business generally in 
which an applicant may have engaged").  See also Marram v. 
Kobrick Offshore Fund, Ltd., 442 Mass. 43, 50-53, 56 (2004) 
(citing drafters' commentary as persuasive authority). 
27 
 
record.  See Goldberg, 444 Mass. at 633-634 (State agency has 
"considerable leeway in interpreting a statute it is charged 
with enforcing, unless a statute unambiguously bars the agency's 
approach" [quotation and citation omitted]). 
 
ii.  Policy of uniformity.  Robinhood next asserts that the 
fiduciary duty rule cannot be reconciled with G. L. c. 110A, 
§ 415, which provides that MUSA "shall be so construed as to 
effectuate its general purpose to make uniform the law of those 
[S]tates which enact it and to coordinate the interpretation and 
administration of this chapter with the related [F]ederal 
regulation."  We already have rejected the argument that this 
provision "mandate[s] that [State] courts adopt the 
interpretation of comparable Federal [and State] securities 
statutes," see Hays v. Ellrich, 471 Mass. 592, 605, cert. 
denied, 577 U.S. 985 (2015); we see no reason why it would 
require the Secretary to do so in this context -– a point 
confirmed by the provision's drafters.  See L. Loss, Commentary 
on the Uniform Securities Act, draftsmen's commentary to § 415, 
at 165 (1976) (§ 415 was not intended to mean "that a [S]tate 
court or Administrator is required to follow a judicial or 
28 
 
administrative precedent set by another [S]tate or by the 
SEC").29 
 
Nor does G. L. c. 110A, § 412 (b), support Robinhood's 
position.  It states that the Secretary "may cooperate with the 
securities administrators of the other [S]tates and the [SEC]" 
when "prescribing rules and forms," "with a view to effectuating 
the policy of this statute to achieve maximum uniformity in the 
form and content of registration statements, applications, and 
reports wherever practicable" (emphasis added).  G. L. c. 110A, 
§ 412 (b).  The plain text does not require uniformity in the 
Secretary's determination of substantive policy.30 
 
At bottom, Robinhood's arguments "reduce[] to the 
proposition that, had it been charged with enforcing [MUSA], 
[it] would have chosen a different regulatory approach," 
 
 
29 Robinhood's proposed construction of G. L. c. 110A, 
§ 415, would freeze the ability to adapt to changes in the 
industry that require new standards of conduct.  Pursuant to 
MUSA, the Legislature authorized the Secretary -- not the SEC or 
sister States' regulatory agencies -- to promulgate rules 
responsive to industry changes.  See Ciampi v. Commissioner of 
Correction, 452 Mass. 162, 168 (2008) ("When the Legislature 
vests an agency with broad authority to effectuate the purposes 
of an act the validity of a regulation promulgated thereunder 
will be sustained so long as it is reasonably related to the 
purposes of the enabling legislation" [quotations and citation 
omitted]). 
 
 
30 Even with regard to forms, registration statements, 
applications and reports, the requirement applies only to the 
extent feasible.  See Black's Law Dictionary 1335 (4th rev. ed. 
1968) (defining "practicable" as "performable, feasible, 
possible"). 
29 
 
Goldberg, 444 Mass. at 635.  But our task is not to pass 
judgment on the wisdom of the policy.  We conclude only that the 
Secretary had the discretion to make that determination, and 
that, in view of the record of investor harm, his ability to do 
so falls within the authority bequeathed to him under MUSA. 
 
c.  Common law.  Robinhood next argues that the fiduciary 
duty rule is invalid because it abrogates the common law as set 
forth in Patsos v. First Albany Corp., 433 Mass. 323 (2001).  We 
disagree. 
 
As we explained in Patsos, under the common law, a 
"relationship between a [broker-dealer] and a customer may be 
either a fiduciary or an ordinary business relationship, 
depending on whether the customer provides sufficient evidence 
to prove 'a full relation of principal and broker.'"  Patsos, 
433 Mass. at 331-332.  The determination of the "scope of a 
[broker-dealer's] fiduciary duties in a particular case is a 
factual issue that turns on the manner in which investment 
decisions have been reached and transactions executed for the 
account."  Id. at 332.  We observed that where broker-dealers 
are entrusted with investment discretion, they "assume[] broad 
fiduciary obligations that extend beyond individual 
transactions."  Id. at 333.  But where the "the customer makes 
the investment decisions and the stockbroker merely receives and 
30 
 
executes a customer's orders, the relationship generally does 
not give rise to general fiduciary duties."  Id. 
 
In each case, the fact-intensive inquiry is guided by "two 
potentially competing considerations:  the need to protect 
customers who relinquish control of their brokerage accounts, 
and the need to ensure that securities broker[-dealers] -- 
particularly those who merely execute purchase and sell orders 
for customers -- not become insurers of their customers' 
investments."  Patsos, 433 Mass. at 336.  We concluded that 
"[a]ssigning general fiduciary duties only to those stockbrokers 
who have the ability to, and in fact do, make most if not all of 
the investment decisions for their customers properly provides 
appropriate protection only for those customers who are 
particularly vulnerable to a broker's wrongful activities."  Id. 
 
Contrary to Robinhood's assertions, the fiduciary duty rule 
does not abrogate the common law.  Instead, the rule, which has 
the force of law, see Borden, Inc. v. Commissioner of Pub. 
Health, 388 Mass. 707, 723, cert. denied sub nom. Formaldehyde 
Inst., Inc. v. Frechette, 464 U.S. 936, (1983), is of equal 
status to the common law, see Commonwealth v. Adams, 482 Mass. 
514, 518 (2019).  The Legislature can provide, and under MUSA 
has provided, protections that may extend beyond those available 
under the common law without abrogating the latter.  In other 
words, the rights and protections afforded under MUSA, including 
31 
 
those available under the fiduciary duty rule, stand shoulder-
to-shoulder with those under the common law.31  Thus, for 
example, an investor injured by a breach of a fiduciary duty may 
have a claim under the fact-intensive inquiry delineated in 
Patsos, whereas the fiduciary duty rule provides a separate and 
distinct regulatory tool to protect investors under MUSA. 
 
This conclusion is not novel.  We have previously 
acknowledged that MUSA provides protections beyond -- without 
overriding -- the common law.  See, e.g., Bulldog Investors Gen. 
Partnership v. Secretary of the Commonwealth, 457 Mass. 210, 220 
(2010) (definition of term "offer" under MUSA "not limited to 
its common-law definition").  See also Welch v. Barach, 84 Mass. 
App. Ct. 113, 119-120 (2013) (MUSA misrepresentation claim does 
not require two elements of common-law tortious 
misrepresentation).32 
 
 
31 Indeed, the Legislature anticipated that MUSA's 
protections would go beyond the common law.  See, e.g., G. L. 
c. 110A, § 401 (d) (for purposes of MUSA, "fraud," "deceit," and 
"defraud" are "not limited to common-law deceit"). 
 
 
32 The Legislature may craft statutory obligations that 
exceed the common law, authorizing a State official or agency to 
define the scope of those obligations.  For example, G. L. 
c. 93A "created new substantive rights by making conduct 
unlawful which was not unlawful under the common law," such as 
"[u]nfair and deceptive practices" beyond those "limited by 
traditional tort and contract law requirements," Slaney v. 
Westwood Auto, Inc., 366 Mass. 688, 693 (1975), quoting 
Commonwealth v. DeCotis, 366 Mass. 234, 244 n.8 (1974), and 
authorized the Attorney General to enforce the new protections, 
 
32 
 
 
d.  Nondelegation doctrine.  Robinhood also maintains that, 
if MUSA permits the Secretary to promulgate the fiduciary duty 
rule, as we conclude it does, then MUSA impermissibly delegates 
legislative authority in violation of the separation of powers 
doctrine embodied in article 30 of the Massachusetts Declaration 
of Rights (art. 30).33  Article 30 "encompasses the general 
principle that the Legislature cannot delegate the power to make 
laws."  Construction Indus. of Mass. v. Commissioner of Labor & 
Indus., 406 Mass. 162, 171 (1989).  "No formula exists for 
determining whether a delegation of legislative authority is 
'proper,'" Chelmsford Trailer Park, Inc. v. Chelmsford, 393 
Mass. 186, 190 (1984), but three considerations are relevant: 
"(1) Did the Legislature delegate the making of fundamental 
policy decisions, rather than just the implementation of 
legislatively determined policy; (2) does the act provide 
adequate direction for implementation, either in the form 
of statutory standards or . . . sufficient guidance to 
 
including by promulgating rules to define the actions that 
constitute "unfair or deceptive acts or practices in the conduct 
of any trade or commerce," Slaney, supra at 694-695 & n.7, 
quoting G. L. c. 93A, § 2.  Likewise, G. L. c. 151B supplemented 
protections available to employees under the common law and 
authorized the Massachusetts Commission Against Discrimination 
to make rules to that effect.  See G. L. c. 151B § 3 (5).  See 
also Green v. Wyman-Gordon Co., 422 Mass. 551, 558 (1996) (G. L. 
c. 151B claims are separate from common-law claims for 
intentional and negligent infliction of emotional distress). 
 
 
33 Article 30 of the Massachusetts Declaration of Rights 
provides, in relevant part, that "[i]n the government of this 
[C]ommonwealth, . . . the executive shall never exercise the 
legislative and judicial powers, or either of them: . . . to the 
end it may be a government of laws and not of men." 
33 
 
enable it to do so; and (3) does the act provide safeguards 
such that abuses of discretion can be controlled?" 
 
Id.  See Oracle USA, Inc. v. Commissioner of Revenue, 487 Mass. 
518, 525 (2021), quoting Gundy v. United States, 139 S. Ct. 
2116, 2123 (2019) ("Delegation is constitutional so long as the 
legislative body provides an 'intelligible principle' to direct 
the exercise of delegated authority").  We address each 
consideration in turn. 
 
First, MUSA sets forth the Legislature's fundamental policy 
decision to protect investors, and more specifically to protect 
them from "unethical or dishonest conduct or practices," G. L. 
c. 110A, § 204 (a) (2) (G).  Delegating the authority to define 
the precise conduct or practices proscribed is not tantamount to 
permitting the Secretary to determine fundamental policy 
decisions.  See, e.g., Commonwealth v. Clemmey, 447 Mass. 121, 
136 (2006) (Legislature's "delegation of the definitions . . . 
simply directed the [agency] to work out the details necessary 
to the implementation of the policy").  Such a delegation 
permissibly draws on the Secretary's expertise to adapt to the 
real-world context of evolving practices in the securities 
industry, including, as relevant here, the changes resulting 
from broker-dealers increasingly choosing to give investment 
advice and blurring the line that traditionally separated 
broker-dealers from investment advisers, as delineated in part 
34 
 
2.a, supra.  See, e.g., Clemmey, supra at 137 (delegation of 
power to agency to define terms used in Wetlands Protection Act 
agricultural exemption proper "because it ensured that the scope 
of the agricultural exemption would be based on the application 
of real-world farming practices").34 
 
Second, the Secretary is not without guidance in defining 
the proscribed practices.  See Chelmsford Trailer Park, Inc., 
393 Mass. at 190.  MUSA allows the Secretary to define such 
conduct and practices only "insofar as the definitions are not 
inconsistent with the provisions of [MUSA]," G. L. c. 110A, 
§ 412 (a); regulations also must be "necessary or appropriate in 
the public interest or for the protection of investors and 
consistent with the purposes fairly intended by the policy and 
provisions of [MUSA]."  Id. § 412 (b).  These provisions provide 
an intelligible principle to direct the Secretary's exercise of 
his authority.  See, e.g., Clemmey, 447 Mass. at 137 (statute's 
guidance sufficient where it generally specified concern for 
land "owned and managed by farmers," jeopardy to "the future 
economic viability of our farms," and "routine and long standing 
 
 
34 Accord United States vs. Levoff, U.S. Dist. Ct., No. 19-
cr-780 (D.N.J. Aug. 12, 2020) (SEC regulations outlawing insider 
trading did not violate nondelegation doctrine because 
Securities and Exchange Act of 1934 delegated power to SEC to 
enact securities regulations toward goal of "insur[ing] the 
maintenance of fair and honest markets in [securities] 
transactions" [quotation and citation omitted]). 
35 
 
farm operations," and was amended from "land for agricultural 
use" to "land in agricultural use" [emphasis added; citations 
omitted]); Tri-Nel Mgt., Inc. v. Board of Health of Barnstable, 
433 Mass. 217, 226 (2001) (statute's guidance sufficient where 
it required "reasonable" regulations to "address the 'health' of 
the community" [citations omitted]). 
 
Third, MUSA provides safeguards such that any abuse of 
discretion "can be controlled," see Chelmsford Trailer Park, 
Inc., 393 Mass. at 190.  Before promulgating regulations, the 
Secretary must make findings that any rule promulgated pursuant 
to MUSA is "necessary or appropriate in the public interest or 
for the protection of investors and consistent with the purposes 
fairly intended by the policy and provisions of [MUSA]."  G. L. 
c. 110A, § 412 (b).  Entities subject to an administrative 
action are entitled to notice and a hearing, G. L. c. 110A, 
§ 305 (b), and may obtain judicial review of such actions, see 
G. L. c. 30A, § 14; G. L. c. 110A, § 411 (a).35  See Clemmey, 447 
 
 
35 Robinhood mistakenly contends that permitting the 
Secretary to define "unethical or dishonest conduct or 
practices," G. L. c. 110A, § 204 (a) (2) (G), by reference to 
the fiduciary duty rule, presents due process concerns in that 
it renders MUSA "so standardless that it invites arbitrary 
enforcement" (citation omitted), Beckles v. United States, 580 
U.S. 256, 262 (2017).  "A law is void for vagueness if persons 
of common intelligence must necessarily guess at its meaning and 
differ as to its application . . . or if it subjects people to 
an unascertainable standard" (citation omitted).  Commonwealth 
v. Cassidy, 479 Mass. 527, 538, cert. denied, 139 S. Ct. 276 
 
36 
 
Mass. at 138 ("the availability of judicial review" weighs in 
favor of conclusion that law "sufficiently demarcate[s] the 
boundaries of regulatory discretion" [citation omitted]).36 
 
e.  Conflict preemption.  Robinhood alternatively argues 
that the fiduciary duty rule is invalid under the doctrine of 
conflict preemption, contending that the rule "stands as an 
obstacle to the accomplishment and execution of the full 
purposes and objectives of [the Federal government]," Marsh v. 
Massachusetts Coastal R.R., 492 Mass. 641, 648 n.18 (2023), 
quoting Sprietsma v. Mercury Marine, 537 U.S. 51, 64 (2002), as 
those purposes and objectives are set forth in the SEC's 
Regulation Best Interest.  See Merck Sharp & Dohme Corp. v. 
Albrecht, 139 S. Ct. 1668, 1679 (2019) (Federal regulation 
issued pursuant to statutorily delegated authority can preempt 
State law).  Robinhood asserts that the SEC intended the 
Regulation Best Interest to set a ceiling on broker-dealers' 
 
(2018).  Tellingly, the fiduciary duty rule essentially imposes 
obligations already well understood by investment advisers.  See 
Section 913 study, supra at vi-vii (investment advisers are 
subject to duties of loyalty and care). 
 
 
36 Our decision in Clemmey, 447 Mass. at 135-136, disposes 
of Robinhood's concern that the Secretary's interpretation vests 
him with the effective "authority to establish new crimes," see 
G. L. c. 110A, § 409 (a).  As we explained, the Legislature may, 
with sufficient guardrails, delegate to an agency the definition 
of criminal conduct; such a delegation does not violate due 
process where "fair notice of the conduct proscribed has been 
provided," Clemmey, supra at 136, as was provided here. 
37 
 
fiduciary obligations to preserve retail investor access to 
investment options that, Robinhood predicts, may become 
economically unfeasible for broker-dealers to continue to offer 
if they must comply with the fiduciary duty rule. 
 
i.  Assumption against preemption.  "[P]re-emption 
fundamentally is a question of congressional intent."  Geier v. 
American Honda Motor Co., 529 U.S. 861, 884 (2000), quoting 
English v. General Elec. Co., 496 U.S. 72, 78 (1990).  Our 
analysis "begins 'with the assumption that the historic police 
powers of the States [are] not to be superseded by . . . Federal 
Act unless that [is] the clear and manifest purpose of 
Congress.'"  Dunn v. Genzyme Corp., 486 Mass. 713, 718 (2021), 
quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 
(1992).37  Because State securities laws, like MUSA, fall within 
a field of "'traditional' [S]tate regulation," the assumption 
guides our analysis.  Oneok, Inc. v. Learjet, Inc., 575 U.S. 
373, 374 (2015). 
 
Moreover, where, as here, "coordinate[d] [S]tate and 
[F]ederal efforts exist within a complementary administrative 
framework, and in the pursuit of common purposes, the case for 
 
 
37 This assumption reflects that "the States are independent 
sovereigns in our [F]ederal system," and is consistent with "the 
historic primacy of [S]tate regulation of matters of health and 
safety."  Medtronic, Inc. v. Lohr, 518 U.S. 470, 485 (1996) 
(plurality opinion). 
38 
 
[F]ederal pre-emption becomes a less persuasive one."  New York 
State Dep't of Social Servs. v. Dublino, 413 U.S. 405, 421 
(1973).  State and Federal schemes have existed side by side 
since the Great Depression;38 and Congress repeatedly has 
expressed its intent to preserve the States' role in regulating 
securities.39  See Capital Research & Mgt. Co. v. Brown, 147 Cal. 
App. 4th 58, 66 (2007) ("Congress intended to preserve the 
[S]tates' anti-fraud authority to control the conduct of brokers 
and dealers").  In this context, a party asserting conflict 
preemption bears a heavy burden to demonstrate "evidence of 
conflict, and not merely with unsupported pronouncements as to 
[Federal] policy" (quotation and citation omitted).  Roberts v. 
Southwestern Bell Mobile Sys., Inc., 429 Mass. 478, 491 (1999).  
 
 
38 "Securities regulation has existed, in one form or 
another, since the mid-1800s," and "[b]efore the Great 
Depression, securities were regulated almost exclusively by the 
[S]tates."  Lindeen v. Securities & Exch. Comm'n, 825 F.3d 646, 
648-649 (D.C. Cir. 2016).  "[B]eginning with Kansas in 1911, 
many states imposed comprehensive securities regulation regimes 
. . . [k]nown as 'blue-sky' laws."  Id. at 649.  During the 
Great Depression, Congress began regulating securities at the 
Federal level, enacting the Securities Act of 1933, 15 U.S.C. 
§§ 77a-77aa, and thereafter the Securities Exchange Act of 1934, 
15 U.S.C. §§ 78a-78pp, which created the SEC.  See Lindeen, 
supra. 
 
 
39 See, e.g., 15 U.S.C. § 77r(c)(1) (preempting State 
securities registration and qualification regimes for some 
offerings but specifying that States "retain jurisdiction . . . 
to investigate and bring enforcement actions, [in connection 
with securities or securities transactions]" with respect to 
"fraud or deceit" or "unlawful conduct by a broker"). 
39 
 
See Chamber of Commerce of the U.S. v. Whiting, 563 U.S. 582, 
607 (2011) ("a high threshold must be met if a [S]tate law is to 
be preempted for conflicting with the purposes of a [F]ederal 
[a]ct" [citation omitted]).  Only "affirmative evidence that 
Congress . . . had a ceiling-setting -- and thus obstacle-
preemption-creating -- intent" will suffice.  Capron v. Office 
of the Attorney Gen. of Mass., 944 F.3d 9, 28 (1st Cir. 2019), 
cert. denied, 141 S. Ct. 150 (2020). 
 
Here, Robinhood's preemption argument is "particularly 
weak" because Congress and the SEC were aware of State laws 
imposing fiduciary obligations on broker-dealers and declined to 
express an intent to preempt those laws.  See Wyeth v. Levine, 
555 U.S. 555, 575 (2009) ("The case for [F]ederal preemption is 
particularly weak where [the Federal government] has indicated 
its awareness of the operation of [S]tate law in a field of 
[F]ederal interest, and has nonetheless decided to stand by both 
concepts and to tolerate whatever tension there [is] between 
them" [citation omitted]).  When it enacted Dodd-Frank with the 
purpose "to protect consumers from abusive financial services 
practices," Dodd-Frank preamble, 124 Stat. at 1376, Congress 
instructed the SEC to look to the "legal or regulatory standards 
of State securities regulators and other regulators intended to 
protect retail customers," as models for the agency's own 
efforts to derive a new standard for broker-dealers.  See Dodd-
40 
 
Frank § 913(c)(8), 124 Stat. at 1826.  The SEC did so,40 and in 
adopting the Regulation Best Interest, the SEC observed that 
"[s]ome [S]tates provide through statute or regulation, among 
other requirements . . . that broker-dealers have some form of 
[S]tate-specific fiduciary duty to their customers in at least 
some circumstances," 84 Fed. Reg. at 33,419,41 and "courts 
 
 
40 See Section 913 study, supra at 91 ("many [S]tates 
require broker-dealers and their agents to observe high 
standards of commercial honor and just and equitable principles 
of trade in the conduct of business, and/or prohibit a variety 
of enumerated unethical or fraudulent practices"). 
 
 
41 For example, the State of Nevada "passed a law in 2017 
that imposes a fiduciary duty on broker-dealers, sales 
representatives, and investment advisers who give investment 
advice."  University of Miami School of Law, Comment Letter on 
"Regulation Best Interest" Proposal, Nos. S7-07-18, 34-38062, 
and S7-08-18, 34-83063, at 8 (Aug. 2, 2018), https://www.sec.gov 
/comments/s7-07-18/s70718-4171732-172295.pdf [https://perma.cc/ 
7WFL-RVTT], citing Nev. Rev. Stat. § 90.575.  The Nevada 
Secretary of State proposed regulations pursuant to the Nevada 
law in January 2019 that would provide that "[a] broker-dealer 
or a sales representative who provides investment advice to 
clients, manages assets, performs discretionary trading, 
utilizes a title or term set forth [in the regulations, e.g., 
'adviser' or 'financial planner'], or who otherwise establishes 
a fiduciary relationship with clients, owes a fiduciary duty to 
their clients."  State of Nevada, Office of the Secretary of 
State, Notice of Draft Regulations and Request for Comment 3, 5-
6 (Jan. 18, 2019).  The proposed regulations have not yet been 
implemented.  Note, Why Robinhood is Not a Fiduciary, supra at 
1457 n.59. 
 
 
"A number of other [S]tates have passed or [were] 
considering similar legislation."  University of Miami School of 
Law, supra at 8, citing Knebel, States Look to Help Investors, 
With Fiduciary Rules in Flux, Bloomberg News (Feb. 7, 2018), 
https://news.bloomberglaw.com/legal-ethics/states-look-to-help-
 
41 
 
interpreting [S]tate common law have imposed fiduciary 
obligations on broker-dealers in certain circumstances," 84 Fed. 
Reg. at 33,333 n.137.  See Finke & Langdon, The Impact of the 
Broker-Dealer Fiduciary Standard on Financial Advice, 25 J. Fin. 
Planning 28, 34 (July 2012) ("There are four [S]tates that apply 
a strict fiduciary standard [to broker-dealers and others] that 
apply a limited fiduciary standard").42 
 
investors-with-fiduciary-rule-in-flux-1? [https://perma.cc/4LKC-
8KBG]. 
 
 
42 California, Missouri, South Carolina, and South Dakota 
each apply a strict fiduciary standard to broker-dealers.  See 
Finke & Langdon, supra at 32.  See also Davis v. Merrill Lynch, 
Pierce, Fenner & Smith, Inc., 906 F.2d 1206, 1215 (8th Cir. 
1990) (South Dakota common law imposes fiduciary duties of 
"utmost good faith, integrity[,] and loyalty" on broker-dealers 
[citation omitted]); Apollo Capital Fund LLC v. Roth Capital 
Partners, LLC, 158 Cal. App. 4th 226, 246 (2007) ("[T]he 
relationship between any stockbroker and his or her customer is 
fiduciary in nature, imposing on the former the duty to act in 
the highest good faith toward the customer" [citation omitted]); 
State ex rel. PaineWebber, Inc. v. Voorhees, 891 S.W.2d 126, 130 
(Mo. 1995) ("In Missouri, stockbrokers owe customers a fiduciary 
duty[, which] includes at least these obligations:  to manage 
the account as dictated by the customer's needs and objectives, 
to inform of risks in particular investments, to refrain from 
self-dealing, to follow order instructions, to disclose any 
self-interest, to stay abreast of market changes, and to explain 
strategies" [citation omitted]); Cowburn v. Leventis, 366 S.C. 
20, 37-38 (Ct. App. 2005) ("A broker or dealer of securities is 
an agent of the buyer, and therefore, generally owes the buyer 
fiduciary duties . . . [often including the duty] to refrain 
from acting adversely to the buyer[']s interest, to avoid 
engaging in fraudulent conduct, and to communicate any 
information he or she may acquire that would be to the buyer[']s 
advantage"). 
 
 
42 
 
 
In promulgating the Regulation Best Interest, the SEC 
"recognize[d] that there is substantial variation in the 
sources, scope, and application of [S]tate fiduciary law."  84 
Fed. Reg. at 33,435.43  Yet the SEC declined to indicate whether, 
in its perspective, the Regulation Best Interest preempted State 
laws, as some commenters urged it to do, stating that it could 
not "analyze the economic effects of the possible preemption of 
[S]tate law at [that] point because the factors that [would] 
shape those judicial determinations [were] too speculative."  84 
Fed. Reg. at 33,435 n.1163. 
 
ii.  Regulation Best Interest sets a floor.  Against this 
backdrop, Robinhood's theory of conflict preemption is grounded 
 
 
"States that impose a limited fiduciary duty include 
Delaware, Florida, Georgia, Illinois, Kansas, Louisiana, 
Maryland, Michigan, Ohio, Pennsylvania, Tennessee, and Texas."  
Finke & Langdon, supra at 33.  See, e.g., O'Malley v. Boris, 742 
A.2d 845, 849 (Del. 1999) (broker-dealers have "fiduciary duties 
of good faith, fair dealing, and loyalty" to customers).  See 
also Wallace v. Hinkle N.W., Inc., 79 Or. App. 177, 181 (1985) 
("A stockbroker is a fiduciary if his client trusts him to 
manage and control the client's account and he accepts that 
responsibility"). 
 
 
43 The SEC acknowledged that broker-dealers in States that 
already imposed fiduciary standards on them might reap cost 
benefits with Regulation Best Interest because "they may already 
engage in practices under the baseline that overlap with certain 
requirements under [the] Regulation Best Interest," 84 Fed. Reg. 
at 33,435, and also that "costs and benefits that arise from 
obligations under Regulation Best Interest that differ from 
obligations under [S]tate law, such as the Conflict of Interest 
Obligation, will be maintained."  Id. 
43 
 
in the SEC's decision not to impose a uniform fiduciary duty 
standard, as well as the SEC's statement that 
"Regulation Best Interest . . . balances the concerns of 
the various commenters in a way that will best achieve the 
Commission's important goals of enhancing retail investor 
protection and decision making, while preserving, to the 
extent possible, retail investor access (in terms of choice 
and cost) to differing types of investment services and 
products" (emphasis added). 
 
84 Fed. Reg. at 33,323.  We disagree that this aspiration to 
preserve investor access to an array of investor services "to 
the extent possible" hurdles the high bar required to find 
conflict preemption.  See Kansas v. Garcia, 140 S. Ct. 791, 801 
(2020) (cautioning against "[i]nvoking some brooding [F]ederal 
interest" as basis for conflict preemption [citation omitted]).  
Indeed, although the SEC mentioned one short-lived experiment to 
suggest that a higher fiduciary obligation might cause broker-
dealers to pass along increased costs to customers or to alter 
their existing offerings,44 the SEC declined invitations to 
 
 
44 In particular, the Department of Labor had promulgated 
regulations pursuant to the Employee Retirement Income Security 
Act of 1974, Pub. L. No. 93-406, 88 Stat. 829, codified as 
amended at 29 U.S.C. §§ 1001 et seq. (ERISA), through which most 
broker-dealers would be deemed fiduciaries when they provided 
recommendations to retirement plan investors.  29 C.F.R. 
§ 2510.3–21(a)(2)(iii), (d) (2017) (DOL Fiduciary Rule), 
repealed in part by 85 Fed. Reg. 40589 (July 7, 2020).  The SEC 
explained that "the full effects of the DOL Fiduciary Rule were 
not realized as it was vacated during the transition period," 
stating only that "a number of industry studies indicated that, 
as a result of the DOL Fiduciary Rule, industry participants had 
already or were planning to alter services and products 
 
44 
 
assess any preemptive effects of the Regulation Best Interest on 
State regulations as "too speculative."  84 Fed. Reg. at 33,325 
& n.61, 33,435 n.1163. 
 
The Supreme Court's decision in Williamson v. Mazda Motor 
of Am., Inc., 562 U.S. 323, 332 (2011), is instructive.  There, 
the Supreme Court considered whether a State tort claim, which 
would effectively require lap-and-shoulder belts in the rear 
middle seat of cars, was preempted because it ostensibly 
presented a conflict with a Federal safety regulation that, for 
cost-savings reasons, gave manufacturers a choice as to the type 
of restraint system to install in the rear seat.  Id. at 326.  
The Court determined that the State tort action was not 
preempted because cost savings was not a "significant regulatory 
objective."  Id. at 332.  The Supreme Court reasoned that 
"to infer from the mere existence of such a cost-
effectiveness judgment that the [F]ederal agency intend[ed] 
to bar States from imposing stricter standards would treat 
all such [F]ederal standards as if they were maximum 
standards, eliminating the possibility that the [F]ederal 
agency [sought] only to set forth a minimum standard 
potentially supplemented through [S]tate tort law." 
 
 
available to retail customers."  84 Fed. Reg. at 33,322 & n.33.  
See id. at 33,322 n.34 ("It was widely reported that a number of 
firms responded to the DOL Fiduciary Rule by either requiring 
customers to enter into more expensive advice relationships or 
by passing through higher compliance costs to customers, which 
altered many retail customer relationships with their financial 
professionals"). 
45 
 
Id. at 336.45 
Like the hoped-for cost savings in Williamson, the SEC's 
wish to "preserv[e], to the extent possible, retail investor 
access" to a variety of investment services and products, 84 
 
 
45 Critically, the Supreme Court distinguished this cost-
saving aspirational goal from the purposes at issue in a prior 
iteration of the same Federal safety regulation, which the Court 
had considered in Geier, a case upon which Robinhood rests its 
preemption argument.  Williamson, 562 U.S. at 336.  Geier 
concerned whether a State tort claim that effectively would 
require airbags was preempted by a Federal regulation allowing 
manufacturers a choice to install a variety and mix of passive 
restraint systems.  See Geier, 529 U.S. at 881.  The Federal 
agency had concluded that permitting a mix of devices "would 
help develop data on comparative effectiveness, would allow the 
industry time to overcome the safety problems and the high 
production costs associated with airbags, and would facilitate 
the development of alternative, cheaper, and safer passive 
restraint systems," and "would thereby build public confidence" 
through a "gradual phase-in" of passive restraint systems.  Id. 
at 879.  The resulting Federal regulation "embodie[d] the 
[agency's] policy judgment that safety would best be promoted if 
manufacturers installed alternative protection systems in their 
fleets rather than one particular system in every car."  Id. at 
881.  The Federal policy to promote safety in vehicles would 
have been undermined by a State claim holding manufacturers 
liable for their failure to install airbags.  Id.  The Court in 
Williamson distinguished the Federal agency's determination in 
Geier, where the "regulation's history, the agency's 
contemporaneous explanation, and its consistently held 
interpretive views indicated that the regulation sought to 
maintain manufacturer choice in order to further significant 
regulatory objectives" (emphasis added), i.e., enhancing safety, 
from the agency's determination in Williamson to permit 
manufacturers to choose either lap or lap-and-shoulder belts for 
rear middle seats for cost-savings reasons.  Williamson, supra 
at 336. 
 
46 
 
Fed. Reg. at 33,323,46 does not preclude the Secretary from 
imposing a higher duty on broker-dealers that provide investment 
advice.  As both Congress and the SEC have made clear, the 
central "purposes and objectives," Marsh, 492 Mass. at 648 n.18, 
quoting Sprietsma, 537 U.S. at 64, of Federal law as it pertains 
to broker-dealer standards are to improve investor protection.  
See Dodd-Frank preamble, 124 Stat. at 1376; 84 Fed. Reg. at 
33,323.  Against the backdrop of a long history of State 
regulations of broker-dealer standards existing alongside 
Federal regulations, including States imposing fiduciary duties 
on broker-dealers; a congressional record encouraging the SEC to 
consider imposing a uniform fiduciary duty standard; the Section 
913 study advising the same; and the SEC's conclusion in its 
adopting release that a preemption analysis would be too 
speculative, we conclude that the Regulation Best Interest 
constitutes a regulatory floor that does not foreclose State 
regulation to more clearly protect investors.  See Williamson, 
562 U.S. at 335.  See also Mobil Oil Corp. v. Attorney Gen., 361 
Mass. 401, 410 (1972) (Federal rule was best understood as 
 
 
46 See, e.g., 84 Fed. Reg. 33,322 ("subject[ing] broker-
dealers to a wholesale and complete application of the existing 
fiduciary standard under the [Investment] Advisers Act . . . 
would significantly reduce retail investor access to differing 
types of investment services and products, reduce retail 
investor choice in how to pay for those products and services, 
and increase costs for retail investors of obtaining investment 
recommendations"). 
47 
 
regulatory floor to State rule without any "clear indication 
that the States were to be precluded from legislating in [the] 
area").  Robinhood has not met its high burden to demonstrate 
otherwise.  See Roberts, 429 Mass. at 491. 
 
4.  Conclusion.  The Superior Court judgment is reversed, 
and the matter is remanded for further proceedings consistent 
with this opinion.47 
 
 
 
 
 
 
 
So ordered. 
 
 
47 Because we address only the legal questions presented by 
the parties, we remand the case to the Superior Court for 
consideration of any fact-dependent issues that may remain.