The Securities and Exchange Commission plans to propose new rules this year to crack down on the behavioral prompts and data analytics used by some online stock brokerages and investment advisers.
The agency’s bid to impose restrictions on trading and investing apps popular with retail traders follows a review by the SEC of “digital engagement practices,” which critics refer to as the gamification of investing. Wall Street’s main regulator said last August that it was concerned that game-like features are putting investors at risk by encouraging excessive trading.
The rule plan, which was announced this week in a calendar of upcoming regulatory actions, could pose significant challenges for online brokerages and advisers. Under SEC rules, if a firm is offering investment advice or recommending securities it can face conduct standards that require putting clients’ interests first.
Since taking over in April 2021, SEC Chair Gary Gensler has raised concerns with how features closely associated with the mobile phone apps offered by brokers such as Robinhood Markets Inc. and Webull Financial can impact trading. He’s also questioned whether big data in finance may create conflicts of interests for brokers and advisers, and whether digital nudges on a trading app can amount to offering a recommendation.
In a statement, Robinhood said it looked forward to engaging with the regulator and that “it’s important not to conflate gamification with simple, intuitive design” which has made investing more accessible. Webull didn’t immediately respond to a request for comment.
In a separate announcement, the SEC said it’s considering proposing new rules on credit ratings agencies’ potential conflicts of interests.
The $100B-plus mega-RIA is folding custom portfolios, daily tax-loss harvesting and unified managed accounts into its Aspen advisor tech platform
From using projects as strategic thinking exercises to real-world challenges as problem-solving exercises, indie firms can make for more powerful talent incubators.
New BCG research names financial services among the world's most AI-exposed industries and the US as a top-tier AI economy.
Rockefeller Capital Management's Mallory Findley on how avoiding conversations risks derailing even the best-laid estate plans.
New Empower research reveals a "retirement drift" problem that hands financial advisors a direct opening to add client value.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
