In a recent speech before the National Association of Plan Advisors, SEC Commissioner Michael Piwowar suggested the commission needs to take “a measured and deliberative approach” to the question of whether brokers who offer personalized investment advice to average mom-and-pop investors should have to act in the best interests of those investors. Since the Securities and Exchange Commission has been actively deliberating the “standard of care” for nearly a decade now, I think we can check that box. Moreover, given the questionable arguments Mr. Piwowar puts forward against rule making, it is hard to believe further “deliberation” would make any difference to his views. Mr. Piwowar started his speech with what has become a signature line: “As demonstrated by the endurance and passion of arguments on all sides, this question is not just really hard to answer. It is really, really, really hard — with three “reallys.’” However, the broker-dealer trade associations that once adamantly opposed a best-interests standard have now embraced it. The Securities Industry and Financial Markets Association, a trade group of securities firms, for example, has publicly declared its support for SEC rule making to impose a uniform fiduciary standard on broker-dealers and investment advisers. Other major stakeholder groups representing investors, broker-dealers, investment advisers, financial planners and state securities regulators have all agreed that Section 913 of the Dodd-Frank Act provides an appropriate framework for commission rule making. It is true that important differences remain over details of how a regulation should be drafted, but when is that not the case? More in Investment News [...]

“Let’s make sure we don’t kill the golden goose,” a manager warned cohorts at New York high-frequency trading firm Athena Capital Research, which had developed a rapid-fire, complex algorithm code-named “Gravy” to fraudulently manipulate the closing prices of tens of thousands of big-name U.S. stocks, such as eBay (EBAY) and Northern Trust Corp. (NTRS). The internal email followed an automated alert received by the multimillion-dollar fund from the Nasdaq stock market informing it that “suspicious orders or quotes that are potentially intended to manipulate the opening or closing price will be reported immediately.” More on Newsweek [...]

Last week, the Securities and Exchange Commission’s (SEC) Investor Advisory Committee — on which I currently serve — recommended, over my objection, that the SEC change the way it assesses who qualifies as an “accredited investor.” Although sensibly challenging the existing approach to accreditation, the committee’s approach was too conservative. Instead, the committee should have called for a more fundamental reconsideration of whether existing investment restrictions are consistent with investor protection. Under existing law, companies can raise funds through public and private offerings. A public offering involves registration of the offering with the SEC and compliance with an ever-expanding list of regulatory requirements. Anyone can buy shares in a public offering. A private offering, by contrast, is subject to a much shorter regulatory checklist, but — with limited exceptions — only accredited investors are able to buy shares. More on The Hill [...]

Wall Street’s industry-funded watchdog plans to shutter its antiquated, quarter-century old trading system for penny stocks, while increasing its oversight of over-the-counter (OTC) securities traded elsewhere, according to a regulatory filing. In the early 1990s, if retail investors or other market participants wanted to see a price quote for an unlisted stock, the Financial Industry Regulatory Authority’s OTC Bulletin Board (OTCBB) system, which was started for just that purpose, was the place to look. But over the years private firms have enabled electronic trading in OTC stocks, and the OTCBB, which brokers still have to pick up a phone to trade through, has seen its market share slide to well under 1 percent. More on Reuters [...]