Massachusetts Secretary Galvin Forms FinTech Working Group

William Galvin, Secretary of the Commonwealth of Massachusetts, has directed the state’s Securities Division to form a FinTech Advisory Working Group.

Secretary Galvin suggests the FinTech Working Group is the first dedicated team established by a state securities regulator to provide support to, and receive advice from, fintech businesses.

“The goal of the working group is to help fintech businesses navigate regulatory requirements, while meeting its mandate to protect investors and to foster fair and efficient capital markets and confidence in the markets,” Galvin says. “The working group will strive to keep regulation in step with digital innovation and will monitor developments in fintech, as well as the challenges encountered by fintech-related businesses in the securities industry.”

According to Secretary Galvin, the working group includes stakeholders from a broad spectrum of the technology and financial services community. “This collaboration will help advise securities regulators on meeting the novel demands of this rapidly growing space,” he says.

The FinTech Working Group members consist of private industry experts in the area, as well as staff members from the Massachusetts Securities Division.

Advisers are likely familiar with Galvin and the recent work of the Massachusetts Securities Division. The Division aggressively investigates and sanctions broker/dealers and advisers operating in the state. In 2016, the regulator launched a broker/dealer audit initiative that focused on firms employing 10 or more agents registered in Massachusetts and employing a higher-than-average percentage of Massachusetts-registered agents with at least one misconduct disclosure on their records. According to the Division’s subsequent report, the average percentage of Massachusetts-registered agents employed with at least one disclosure incident at all broker/dealer firms doing business in the state, regardless of size, was about 15% (as of June 2016). According to officials, the firms’ responses show the vast majority of broker/dealers are conducting more background checks due to FINRA Rule 3110(e), which became effective on July 1, 2015.