Every year, American savers lose up to $40 billion because brokers give them bad advice. In spite of this, SEC Chair Jay Clayton has proposed new rules that won’t stop conflicts of interests that lead brokers to rip off their clients. The SEC should protect small investors, not give away the store to Wall Street.
Given the evidence that, after being provided a summary relationship disclosure, investors still cannot fully understand, and in some cases misunderstand, fundamental differences in the nature of the brokerage and advisory relationships and the respective duties they are owed, the different fees they would pay, or how various conflicts of interest can influence the recommendations they receive, a regulatory regime that relies on disclosure for investors to make an informed decision about what type of financial professional to work with and what type of account to use is certain to fail.
Click here to download a PDF version of the letter.
AFR opposes policy proposals that would silence shareholders voice and that would make it harder for proxy advisory firms to advise investors.
What we heard today from the diverse membership of the SEC’s own advisory committee is that they share our view that the proposed Reg BI would not protect investors. The IAC has called on the SEC to instead pass rules that make clear that brokers have a legal obligation to act in the best interests of their clients.
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.
Americans for Financial Reform Education Fund sent a letter to the SEC regarding proposed amendments to the Commission’s Whistleblower Program rules. While we generally support a few of the proposed amendments, we are concerned that a number other proposed changes would initially undermine the Whistleblower
“’Quarterly disclosures are very important. A lot can happen in six months, and it’s just not appropriate to reduce disclosures,’ said Marcus Stanley, the policy director for Americans for Financial Reform, a coalition of foundations, unions and public interest groups that pushes for stronger financial regulation. ‘It’s just going to advantage insiders further.’”
Brokers too often steer investors into poorly performing, high-cost investments that are profitable for the broker, but bad for individual investors. The Securities and Exchange Commission has proposed a new regulation that purports to address the problem, but its remedy is too vague and too weak. By creating a veneer of protection, but not the reality, it would deliver a false sense of security that could leave investors worse off than they are now.