Mint mobile stock robinhood11/12/2023 ![]() ![]() After the GameStop day-trading craze, they questioned whether trading platforms’ use of engaging features-such as a list of “top mover" stocks-might function as a recommendation. But regulators say investment advice has changed with the growth of self-directed platforms that operate primarily over the internet. ![]() Traditionally, that advice came when an investor called up a broker, who made suggestions about what stocks to buy. Rather than simply urging clients to pile into products that generate the highest commissions or fees, a broker must take into account things such as the investor’s risk tolerance, liquidity needs and investment time horizon. While individual investors tend not to benefit from frequent trading, such behavior can be lucrative for market intermediaries.Įxisting SEC rules prohibit retail brokers from putting their own financial interests ahead of their customers’ when making investment recommendations. Regulators worried that by bombarding investors with push notifications, colorful graphics and gamelike features, brokerage apps could induce users to trade too much for their own good. That episode sparked congressional hearings, a 45-page SEC staff report, and a series of sweeping proposals to change the way stock trading works behind the scenes. The rule proposal stems from a two-year SEC review of Wall Street’s “digital engagement practices" following the trading frenzy in GameStop and other meme stocks in early 2021. Republican SEC Commissioner Mark Uyeda, however, said the rule is so broad it could encompass common tools for exploring investing strategies. The agency’s goal is to prevent emerging technologies from undermining firms’ legal obligation to act in the best interests of their clients. It would require brokers and advisers who deploy such tools to “neutralize or eliminate" conflicts of interest they create. The Securities and Exchange Commission plans to propose a rule Wednesday that would hold algorithms that predict, guide or forecast investors’ behavior, in certain cases, to a similar standard as investment advice. ![]()
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