Plaintiffs represented by Scalia in the lawsuit include the U.S. Chamber of Commerce, the American Council of Life Insurers, the Financial Services Institute, the National Association of Insurance and Financial Advisors, the Insured Retirement Institute and SIFMA.
The industry plaintiffs were consolidated from three lawsuits, each filed in 2016 in U.S. District Court for the Northern District of Texas. The plaintiffs lost each of their federal cases and then filed appeals in the Fifth Circuit, where the case is pending. The appeals court heard arguments July 31, and many industry experts predicted a ruling by early 2018, but there is growing conjecture that the Fifth Circuit may table the lawsuit to allow the DOL and the Securities and Exchange Commission to finish fiduciary rule-making.
The complaint Massachusetts filed against Scottrade alleges "an aggressive sales culture" that undermined the DOL’s fiduciary rule by encouraging brokers to "drum up additional business" ahead of a planned merger with TD Ameritrade, and during the second half of 2017, when the broker-dealer “knowingly included retirement accounts in the scope of these contests,” according to the Massachusetts administrative order.
As part of their sales contests, Scottrade offered weekly cash prizes in the amounts of $500 and $2,500 to brokers who hit the firm’s cold-call quotas. In one nationwide contest, Scottrade allegedly offered $285,000 in incentives to win and retain clients.
Scottrade is a Massachusetts broker-dealer acquired by TD Ameritrade in September 2017. “We don’t comment on such matters,” said TD Ameritrade spokesperson Alyson Nikulicz. Scottrade did not respond to a request for comment.