William Galvin, Massachusetts' Secretary of the Commonwealth, who's long been a thorn in the side of the securities industry, lost a vote for the state Democratic party's endorsement over the weekend, setting up a September primary contest with a challenger.
Mr. Galvin has been Secretary of the Commonwealth since 1994. During and after the financial crisis, he took an aggressive stance, imposing fines and taking legal actions against high-profile brokerage firms, and earning the private ire of many senior executives at broker-dealers across the country.
According to news reports, Mr. Galvin lost a vote over the weekend to a challenger, Boston City Council member Josh Zakim, by a margin of 55% to 45%. It was widely considered an upset. There were 4,000 delegates voting at the convention, which was in Worcester.
In an interview Monday morning, Mr. Galvin sounded confident that he would win the primary, which is in three months, on Sept. 4.
In fact, he's lost the Democratic endorsement twice in the past and went on to win the general election, in which he has a broader appeal, Mr. Galvin said.
"I'm not taking anybody lightly, but I have a good record and will bring it up," he said.
Mr. Galvin added that Mr. Zakim has received donations from some people in the financial services industry, which the Secretary of the Commonwealth's office oversees through its securities division.
For example, in July 2015, Seth and Beth Klarman donated $1,000 each to Mr. Zakim's campaign fund, according to online records at www.mass.gov. Mr. Klarman is the founder of the Baupost Group, a giant hedge fund with $32 billion in assets, according to Forbes.
In February, Mr. Klarman donated another $1,000 to Mr. Zakim's campaign.
A report in the Boston Globe credited Mr. Zakim's victory with reflecting a generational change in the Massachusetts Democratic party. Mr. Zakim is 34 and Mr. Galvin is 67.
"That's a significant margin," Mr. Zakim said of his win, according to the Boston Globe. "I take this as a great moment at the beginning of a campaign ... We have different ideas about some of the core functions of this office."
Mr. Zakim did not return a call on Monday to comment.
A few years after the financial crisis, Mr. Galvin was the most widely feared securities regulator in the industry. Over one 12-month period six years ago, he ordered fines totaling at least $56 million against broker-dealers.
"I will be talking about the record of enforcement at a time Trump administration is peeling back regulations like Dodd-Frank and the fiduciary rule," Mr. Galvin said. "My record of getting victims back their money is pretty strong, and I will be bringing that up."