Major Change for Asset Managers, Says SEC Chairman

The Securities and Exchange Commission (SEC) just passed a new rule that will require brokers to better act in the best interest of investors and disclose more about potential conflicts of interest that could impact their advice.

Jay Clayton, chairman of the Securities and Exchange Commission, visited Babson Boston on Monday, July 8, to share his insights on the new regulation, which has been a decade in the making.

Professor Erik Sirri, who served as the director of the Division of Trading and Markets at the SEC from 2006–2009, introduced Clayton. The chairman provided a brief overview of the rule-making package, addressed concerns that have been expressed by those who oppose the regulation, and answered audience questions.

“These actions are designed to increase investor protection while preserving access for Main Street investors—both in terms of choice and cost—to a variety of investment services and products,” said Clayton.

One of the rules Clayton highlighted was that of Regulation Best Interest—or “Reg. BI”— that requires broker-dealers to only recommend financial products to their customers that are in their customers’ best interests, and to clearly identify any potential conflicts of interest and financial incentives the broker-dealer may have with those products.

“I firmly believe that retail investors will be better off—choice and competition will ultimately inure to the benefit of retail investors in terms of lower fees, better services and transparency, and more offerings,” he noted.

Newly appointed Stephen Spinelli, Jr. MBA ‘92, PhD was on hand to provide welcoming remarks and reiterate that although Babson is known for entrepreneurship, finance is the top concentrations for Babson students. Many of these students engage with the Stephen D. Cutler Center for Investments and Finance, which sponsored the event.

The Cutler Center is dedicated to advancing Babson’s innovative and practical approach to finance education. “One of the key initiatives of the center is to promote thought leadership by hosting or sponsoring a wide variety of events to allow faculty, students, and alumni to learn, network, and collaborate with one another,” noted Patrick Gregory, managing director of the Cutler Center.

What better place to host such an event than Babson’s Boston location in the heart of the financial district. The event, open to both the Babson community and local finance community, featured a capacity crowd of 150 people, including students, alumni, faculty and the center’s founder and benefactor, Stephen Cutler MBA’61.

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Tagged Finance, Household Names, Leadership

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