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SEC Chairman Clayton: Broker Sales Contests Should Be Eliminated

In a statement released on Wednesday, Securities and Exchange Commission chairman Jay Clayton said that it is in the best interest of Main Street investors to eliminate sales contests for investment products.

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In a statement released on Wednesday, Securities and Exchange Commission chairman Jay Clayton said that it is in the best interest of Main Street investors to eliminate broker sales contests, calling the practice “questionable.”

Clayton issued a statement discussing his impressions from six investor roundtables where he met with retail investors to discuss the SEC’s recently proposed rules regarding the obligations of financial professionals to their investor clients.

“Main Street investors have no tolerance for certain questionable sales practices such as high-pressure, product-based sales contests,” said Chairman Clayton. “In these circumstances, I do not believe it is possible for an investment professional to say with credibility that the investment professional is not putting his or her own interests ahead of the interests of the customer.”

He added, “I believe—and it is clear to me that Main Street investors believe—that these practices should be eliminated. Eliminating these practices would enhance investor protection but would not adversely affect investor choice and opportunity.”

The regulators have also scheduled an additional investor roundtable, which will be held in Baltimore on the evening of September 20, 2018. Commissioners Kara Stein and Robert Jackson are expected to join Chairman Clayton and senior SEC staff at the event. Similar roundtables have taken place in Houston, Atlanta, Miami, Washington, D.C., Philadelphia, and Denver.

The Baltimore roundtable will be held at the Reginald F. Lewis Museum of Maryland African American History & Culture at 830 E. Pratt Street at 6:00-7:30 p.m. Interested attendees should RSVP at outreach@sec.gov.

In April 2018, the SEC voted to propose a package of rulemakings that they claim is “designed to enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers while preserving access to a variety of types of advice relationships and investment products.”

The SEC ended its three-month public comment period on the proposed regulation earlier this month.

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