(Washington)

The SEC says that a lack of fee disclosures related to conflicts of interest may be rife across the wealth management industry. Now the SEC is giving a free pass to those that have failed to disclose. So long as investors come clean and give money back to investors, they won’t be punished. The biggest abuses seem to be in the lack of disclosure of mutual fund fees, which goes against the rules laid out in the Investment Advisers Act of 1940. Those who come forward will not face civil monetary penalties, but that special treatment will only be for those who come forward voluntarily.

FINSUM: Hard to say how big of a problem this is. But it does sound like this might be a good way to clean up the issue quickly.

(New York)

Investors need to be on red alert today, as this is the day markets have been waiting for. US inflation data for January comes out this morning, the piece of information which will either assuage or accelerate fears about pending Fed rate hikes and a possible recession. Not only will the data affect US markets, but if inflation accelerates, it will also impact other asset classes, such as the Dollar, and by extension, emerging markets.

FINSUM: If inflation is ahead of forecasts, or looks at all strong, it will likely panic markets. If it is weak, there may be a relief rally.

(New York)

The president of Wells Fargo Advisors, David Kowach, shared his views on the industry yesterday. He says that advisors must embrace technology, bridge the generation gap, and become more professional in order to thrive. While some see technologies, like robo advisors or artificial intelligence, as a threat, Kowach says these may “displace lower-value activities, but not meaningful, deep client relationships and caring”. He says it is hard to disrupt advisors who really deeply understand their clients.

FINSUM: Pretty vague and bland platitudes about wealth management, but we thought some of our readers might like to hear them. We do agree that there is a human element to the client-advisor relationship which will be hard to disrupt.

(New York)

The Dow experienced mild gains yesterday, with just a 40-point move higher. After so much back and forth recently, nothing could have been more welcome for many investors. The mild move begs Barron’s to ask the question of whether stocks have finally found a floor after a roller coaster two weeks. Stocks started rough, but rallied late in the day, giving signs of renewed optimism. The most interesting part was that after opening down 180 points, bids started to appear which supported the market, leading some to believe that there is actually a market clearing price in place.

FINSUM: Whatever the market did until now is immaterial in our opinion, as it is this morning that inflation data comes out, and that will ultimately be what moves markets in one direction or another.

(New York)

Everyone is blaming last week’s big volatility on the VIX index. Explanations for the big falls are swirling and include an over-reliance on VIX-linked funds and insurers’ volatility strategy. However, FINRA is now looking into another potential cause—deliberate manipulation of the VIX. FINRA suspects traders have been trying to deliberately influence the VIX to move the price of derivatives. The tip on the behavior was given by an anonymous whistleblower.

FINSUM: Given the track record of misbehavior (e.g. Libor), it would be no surprise if traders were trying to manipulate the VIX. However, it is unclear what role that might have had in last week’s crash.