Sometimes it’s easy to criticize the regulators we deal with − for example, when a particular rule or course of action makes things more difficult or complicated and the benefit is not necessarily apparent. It can cause us to wonder whether there is really a focus on protecting market participants and the investing public. Now, on reflection, one generally recognizes that the regulators have quite a difficult job and must balance a great number of issues and constituencies, but sometimes, depending on the particular circumstances, it takes a little effort to get there.
So it’s reassuring when regulators say or do something that makes it clear that they really do get it, and they are looking out for peoples’ best interests.
FINRA recently issued an Investor Alert warning that unscrupulous individuals, taking advantage of the fact that companies today use online video call technologies as a convenient and cost-effective way to interview job applicants, masquerade as recruiters for legitimate organizations (including FINRA) and use these online technologies to trick people into giving away personal information and even money. While branded an “Investor Alert,” this notice is actually beneficial to anyone who may be in the job market, whether or not they are investors, warning that these fraudsters will try to obtain personal information such as Social Security numbers, credit card information and bank account numbers. The alert provides great advice on how to spot these fraudsters and avoid becoming a victim.
Around the same time, new SEC Chairman Jay Clayton was speaking at the Economic Club of New York, setting out a number of guiding principles for the Commission and how they should be put into practice. The last two items Chairman Clayton mentioned were improving disclosure to investors and dedicating resources to educate them. About the former, Chairman Clayton said that “whether investors participate in our markets directly or indirectly, and with or without investment advice, it is clear that they and their advisors must have access to information about potential investments that is easily accessible and meaningful,” and he described several SEC initiatives to improve the disclosure available to investors. With respect to the latter, the Chairman stated that one of his priorities is “getting the wealth of information that the SEC has into the hands of investors, through whatever means can reach them.” In that regard, the Commission has undertaken efforts to simplify and enhance the resources available to educate investors on how to find background information on investment professionals and make informed decisions with respect to establishing financial relationships. In concluding, Chairman Clayton gave “a short but important message for Main Street investors: the best way to protect yourself is to check out who you are dealing with, and the SEC wants to make that easier.”
The Chairman’s point is well taken. Successful investing is not simple and providing information that can make the process more understandable for the average person is clearly beneficial. Moreover, notwithstanding the myriad rules and the SEC’s diligent enforcement efforts, there will always be fraudsters looking to take advantage of unsophisticated investors and steal their money.
So it’s good to know that the Commission and FINRA are being proactive in providing investors with the information they need to better protect themselves. It certainly makes clear that the regulators really do have a fix on protecting investors and even, in the above FINRA alert, people who may not be investors, and that is very comforting.