SEC Chairman Jay Clayton prevailed, however, saying the proposal would help small businesses grow and thrive, “particularly when they are located in places that lack established, robust capital-raising networks.”
Private equity firms held roughly $3.9 trillion in assets as of 2019, up 12.2% from 2018, according to the SEC. While wealthy investors sometimes seek out private equity funds to earn returns that beat public markets, private equity can be expensive and opaque and is generally far less regulated, critics say.
Meyer said he will be surprised if broker-dealers support the proposal, “which came out of left field, since they’ll be on the hook if there is fraud when their reps connect with one of these finders.” The exemptive order requires finders to connect with a broker or rep to make actual sales.
As the PIABA’s new president, Meyer also plans to push Finra to include firm-wide broker-dealer enforcement statistics on BrokerCheck, the online data bank that investors can use to check out the background of some 6,000 brokers and hybrid advisors before hiring one.
“Right now, investors can only look at data at the broker level, not the firm level,” Meyer said. “I want investors to be able to access a firm’s records so they can see a firm’s culture and enforcement cases. Does a firm or its brokers have 10 complaints, enforcements or enforcement or arbitration cases? The more information an investor has, the better they’ll be able to evaluate and make decisions about who to entrust with their life savings.
“This is a new initiative that I’m taking the lead on,” he added. “I plan to talk to Finra and other advocacy groups. This won’t take years of study and investigation. Finra already has access to this information. Why not make it available to investors?”