It’s SEC week here at WealthTech Weekly as the regulator took action on several items on its agenda pertaining to digital investing and wealth management.
Since his confirmation hearings in March, SEC chairman Gary Gensler has pledged to scrutinize retail stock trading apps and techniques used to encourage inexperienced investors to keep trading. Which makes sense given President Joe Biden named Gensler for the job in the wake of the so-called “meme stock” mania.
Late last week, the SEC took initial steps toward this goal, publishing a request for comment on digital engagement techniques used by online brokers and financial advisors. “Gamification” techniques are of particular interest, as are marketing techniques, app design elements and data analytics these companies use, all of which could be used to craft new rules or update existing ones.
Gensler also confirmed previous suspicions that payment for order flow — the controversial practice of market makers paying broker-dealers to send client orders for execution — is on his agenda. This could have huge implications for online broker-dealers that use these payments to offer “free” stock trading to retail consumers.
And the regulator continues to make cybersecurity shortcomings a focus of enforcement actions. Financial Planning’s Cynthia Fernandez dives into fines levied against three IBDs totaling $750,000.
Perhaps more action against shady cryptocurrency providers is coming next? | | Ryan Neal
Technology Editor, Financial Planning
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| By Ryan W. Neal 4 min read | Feedback could inform a rule impacting how fintech startups and traditional wealth management firms use technology to engage retail investors. Read story → |
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| | | By Cynthia Fernandez 6 min read | The firms failed to update their cybersecurity policies immediately after client data was exposed. Read story → |
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| | | By Annie Massa 2 min read | The controversial practice generated 80% of the brokerage app's Q2 revenue. Read story → |
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| | | By Jared Dillian 3 min read | Parallels between the modern retail investing boom and the dot-com bubble day traders are impossible to miss, Jard Dillian writes. Read story → |
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| | | By Joe Light 5 min read | Federal regulators haven’t yet made substantial moves against the crypto savings accounts but have set their sights on the stablecoin market. Read story → |
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