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SEC faces backlash as it lays out regulatory agenda

Investment Executive | James Langton | Jun 14, 2021

Gensler reopening regulatory files - SEC faces backlash as it lays out regulatory agendaCritics question plans to unwind Trump-era rules

Following a surge in retail trading this year, the U.S. Securities and Exchange Commission (SEC) is considering rules to address the “gamification” of trading on mobile apps, yet critics say it’s missing the mark by seeking to undo work carried out under former U.S. president Donald Trump.

In its latest regulatory agenda, which sets out an array of short- and long-term actions the regulator is planning, the SEC said it’s considering measures to enhance retail investor protection. For instance, the commission is considering potential rules to address “gamification, behavioural prompts, predictive analytics, and differential marketing.”

Whether the SEC addresses the issue remains to be seen — work in this area is still at the “pre-rule” stage.

Other areas that are facing possible scrutiny include tougher investor protection in the exempt market; a possible consultation on the role of index providers and other third-party firms, and their implications for the asset management industry; and possible rules to combat fraud and manipulation in the security-based swaps market.

See:  US financial regulator warns against strict cryptocurrency rules

These potential new areas for SEC action are in addition to its existing rule making efforts in an array of areas, including climate risk disclosure, board and workforce diversity, market structure modernization, and enhancing shareholder democracy.

However, the proposed agenda is coming under fire from a couple of the SEC’s conservative commissioners —

Hester Peirce and Elad Roisman — who issued a joint statement saying

"the agenda is missing some important priorities including rules to provide clarity for digital assets, allow companies to compensate gig workers with equity, and revisit proxy plumbing.”

These omissions may reflect the fact that the SEC is also looking to scrap some of the work done under the previous administration, they suggested.

“As far as we can tell, the agency has received no new information which would warrant opening up any of these rules for further changes at this time. We are disappointed that the commission would dedicate our scarce resources to rehashing newly completed rules,” they said.

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“We hope chair Gensler will reconsider the need to revisit freshly minted rules, but we look forward to working with him and our fellow commissioners on other rulemaking initiatives reflected on the agenda and on addressing issues of perennial importance such as elder investor fraud and small business capital formation,” they concluded.

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NCFA Jan 2018 resize - SEC faces backlash as it lays out regulatory agenda The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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