Displaying items by tag: SEC

(Washington)

The bad news just keeps on coming for the tech industry. Already this morning there is a lot of negative press about Google allowing third party developers to actually read users’ Gmail accounts, and now comes the news that the SEC has opened an investigation into Facebook for its data breaches. The SEC is looking at Facebook’s disclosures of the breach, and in particular, Mark Zuckerberg’s congressional testimony. Facebook says it is fully complying with all the current investigations it is facing.

FINSUM: This development might be particularly troublesome for the stock because investors are most familiar with the SEC. Hard to see what might develop here.

(Washington)

The SEC rule has been a getting a lot of pushback both in the press and by industry commentators. Now, in what only seemed a matter of time, a more formal campaign against the new rule is taking shape. The new “Raise Your Voice” campaign is being organized by a group of RIAs and seeks to unite fiduciaries in a push against the grouping of brokers and advisors in the new rule.

FINSUM: While we do see the SEC’s logic in how it drafted the new rule, brokers and advisors are very different animals and we believe more delineation needs to be drawn between the two.

(Washington)

Advisors all across the country see a major flaw in the SEC rule. Fiduciaries feel they are being completely short-changed by the rule because the way the SEC has drafted it makes advisors and brokers look like identical twins, almost eliminating the distinction from a client’s perspective, according to the “Raise Your Voice” campaign, or a group of advisors pushing against the rule. “The proposed rules depict broker and advisers as essentially the same, like identical twins, but without identical investor protections”, says the spearhead of the campaign, continuing that “The legal, contractual, business and cultural differences dividing brokers and advisers are important and must be clearly stated and explained”. The campaign is encouraging advisors to make their opinions heard while the SEC comment period is open (it closes August 7th).

FINSUM: The SEC tried to make a rule that avoided over-delineating things as part of an effort to avoid loopholes, but this non-standard approach has made many quite angry. We suspect the rule will be edited significantly.

(Washington)

If there is a core element to the debate going on over the SEC rule, it is whether the rule actually does anything new. Some argue that the SEC’s best interest rule is just a rehashing of the well-established FINRA suitability standard. For instance, the CFP has commented that “Our concern is that as introduced, the rule proposal may offer the appearance but not necessarily the reality of increased investor protection”. There are two areas of consternation about the rule, at least as far as consumer groups are concerned—the lack of a definition of “best interest”, and how the rule has differing standards for brokers versus fiduciaries.

FINSUM: While it does seem unconventional, the SEC’s lack of a definition of “best interest” means it may ultimately be more broadly applicable than defining it, and thus creating loopholes.

(Washington)

The SEC has been getting a grilling over its new best interest rule. The industry doesn’t like its proposed disclosure document (CSR) or its restriction on the use of titles, while consumer protection groups say the rule is not stringent enough. Yesterday, SEC chairman Clayton faced questions over the rule from the House Financial Services Committee. Answering questions on whether the rule went far enough and whether the rule should be harmonized between brokers and advisors, Clayton explained that brokers and fiduciaries have different relationships with clients and said “There is no conflict-free relationship … Disclosing [conflicts], mitigating them, making sure everybody understands what the motivations are ... that's what I want to do in this space”.

FINSUM: We think Clayton stood his ground quite well, and we particularly like that final quote, which was grounded in realism.