As a subcommittee of the House Financial Services Committee gets ready to hear testimony on the SEC’s proposed regulations on broker and investment advisor conduct today, several states are pushing ahead with state-level fiduciary rules — but they’ll likely face challenges in the courts, according to news reports.

New York state legislators have recently introduced a bill that would require brokers to disclose point-blank that they’re not fiduciaries and therefore don’t need to act in the client’s best interest, the Intercept writes. Nevada, New Jersey and Maryland have similar fiduciary proposals in the works — and even more states may follow suit, Barbara Roper, director of investor protection at the Consumer Federation of America, tells the web publication.

Some states are intent on pushing through rules already. The Maryland Financial Consumer Protection Commission, for example, has said rules by state insurance regulators and the SEC’s proposed Regulation Best Interest “largely preserve the status quo,” the Intercept writes.

Other state regulators, on the other hand, will wait and see what the SEC comes up with, according to the web publication. Massachusetts Secretary of the Commonwealth William Galvin wrote to the commission last year warning that if the adopted rule doesn’t promote a strong fiduciary standard, the state “will be forced to adopt its own fiduciary standard to protect our citizens from conflicted advice by broker-dealers,” the Intercept writes.

In New York, meanwhile, Assembly Member Jeffrey Dinowitz, who sponsored the state bill requiring full disclosure from brokers, isn’t rushing the bill because he’s “cautiously optimistic” about the rule from the SEC, says William Schwartz, Dinowitz’s legislative director, according to the web publication.

Regardless, the industry is almost certain to push back with litigation similar to the lawsuit filed in July by the New York chapter of the National Association of Insurance and Financial Advisors against an amendment requiring insurance salespeople to abide by the best-interest standard, Roper tells the Intercept.

For now, industry groups are exerting other types of pressure on the state regulators. At a hearing before state legislators in Maryland yesterday, Dale Brown, president and CEO of the Financial Services Institute, told lawmakers that the state-level fiduciary rule would hurt the state’s consumers “by significantly increasing costs that would eventually be passed on to investors,” according to FA magazine.

FSI — which successfully lobbied Maryland lawmakers to withdraw its fiduciary bill last year — represents 635 Maryland advisors and two broker-dealers, the publication writes.

Barbara Roper

Brown said that while he supports a best-interest standard, it should be implemented across the country by the SEC, the publication writes. What’s more, he warned that Maryland’s proposed regulation “would also likely lead some firms to stop offering commission-based financial planning services," according to FA magazine writes.

Large brokerages are taking an even more aggressive tack. Morgan Stanley has threatened to stop offering services in Nevada if the state goes through with its rule, and Wells Fargo and several other brokerages say they would cut down on investment options offered in the state.