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SEC Chairman Says Reg BI Will Not Stifle Innovation in Brokerage Industry

June 10, 2019

The SEC’s Regulation Best Interest package governing financial advice will not put the brakes on innovation in the brokerage space -- but brokers will have to be far more up front with their customers, SEC Chairman Jay Clayton says, according to news reports.

In response to a question posed during a CNBC Squawk Box interview about whether the new set of rules approved by the SEC last week will hinder innovation in the brokerage industry via unexpected regulatory expenses, Clayton said it would not.

“You do a good job managing money, you should get paid,” the SEC commissioner told the TV news channel.

But Clayton also said that brokers will have to be far more honest with their clients about what they do, according to CNBC. Clayton told the news channel that the old regulations weren’t necessarily substandard, but they weren’t very clear, either.

Jay Clayton

“We’re raising the standard of conduct for broker-dealers. You’re going to have to be very candid with your investor,” Clayton told the news channel. “The key part of this rules package is whether you’re an investment advisor or a broker-dealer, you’re going to have to be very candid with how you’re making your money.”

By Alex Padalka
  • To read the CNBC article cited in this story, click here.