The Massachusetts Securities Division charged Scottrade onThursday with violating the impartial conduct standards laid out inthe Labor Department's fiduciary rule, which tookeffect on June 9, 2017.

Commonwealth Secretary William Galvin, the state's topsecurities regulator, charged the broker-dealer with “dishonest andunethical activity and failure to supervise” for conducting salescontests that violated Labor's impartial conduct standards.

Despite Scottrade adopting a rule to adhere to the impartialconduct standards that prohibited sales quotas, appraisals,bonuses, contests and other incentives for retirement orprospective retirement account clients, the broker-dealer “held atleast two sales contests which included retirement assets” afterJune 9, the complaint states.

The complaint states that prior to theimpartial conduct standards becoming effective, “Scottrade employeda firmwide culture characterized by aggressive sales practices andincentive-based programs.”

For example, from December 2015 to April 2017, Scottradeconducted a “series of call nights and sales contests, in part todrum up additional business in light of an upcoming merger with TDAmeritrade,” the complaint states.

By conducting at least two sales contests after June 9,Scottrade failed to enforce the new standards it had put inplace.

“The performance of agents who participated in the contests wastracked and appraised, and awards and incentives were given out inconnection with retirement assets,” according to the complaint.

TD Ameritrade, which acquired Scottrade in September, says thatit does not comment on pending regulatory or legal matters.

Galvin has been a vocal supporter of Labor's fiduciaryrule. Massachusetts' action looks to be the first action taken by astate regarding fiduciary rule compliance.

“Despite the efforts in Washington to kill the fiduciary rule,the impartial conduct provision remains in place,” Galvin saidThursday in announcing the complaint against Scottrade. “If theDepartment of Labor will not enforce its own laws and rules, thenthe states must do what they can to protect retirees from firms whobelieve they can play with peoples' life savings by conductingsophomoric contests.”

The complaint against Scottrade seeks a cease and desist order,censure and an administrative fine.