FOR IMMEDIATE RELEASE
Sept. 20, 2018
CONTACT:
Marceline White, marceline@marylandconsumers.org, (410) 220-0494
Carter Dougherty, carter@ourfinancialsecurity.org, (202) 251-6700
Consumer Groups Criticize Bad SEC Investor-Protection Proposal
The Securities and Exchange Commission, which is holding an investor roundtable in Baltimore today, is pushing ahead with a new regulation that would fail to protect investors from brokers who put their own interests ahead of their clients, according to Maryland consumer advocates.
The SEC’s proposed “Regulation Best Interest” is anything but, a plan for creating a veneer of investor protection that would fail to chase bad practices out of the industry that cost savers $40 billion per year. Many savers fall victim to brokers who steer them into investments that pay lucrative fees but don’t generate the best possible return for investors.
“It’s pretty sad that we need a rule to ensure that brokers put their clients’ interests first, but that’s the reality of today’s marketplace,” said Marceline White, executive director of the Maryland Consumer Rights Coalition. “What’s disappointing is the SEC’s approach. It is proposing the appearance of investor protection, not the real thing.”
Americans for Financial Reform and the Consumer Federation of America outlined the problems with the SEC proposal in a short memo for media and other interested parties. The memo links to a video of George and Rachel Wheeler, two retirees whose broker put them into investments that worked out well for the broker, but less so for the Wheelers.
The proposal from SEC Chairman Jay Clayton comes at a time when the Trump administration is hammering away at practices and regulations put in place after the 2008 financial crisis to protect consumers and investors, and ensure the stability of the financial system. The fact that the industry is supporting the SEC proposal, while trying to weaken it further, is telling.
“We need rules based on the common-sense principle that experts providing investment advice should actually serve their clients’ best interests,” said Rion Dennis, financial reform advocate with AFR. “Without that, Wall Street can keep taking billions of dollars a year from the pockets of middle class investors. The proposal from the SEC does not meet that standard.”
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