Commonwealth later amended its disclosures to state that these circumstances “could present a potential conflict” because the advisor “may have an incentive” to recommend investments that compensate the advisor. But the SEC’s complaint alleged that this amended disclosure is “still deficient and misleading” because of the words “potential” and “may.”
The SEC enforcement division now seems to be moving onto a second, more “expansive” phase of “regulating without rules,’ which could reach even more investment advisors and firms, Financial Services Institute’s General Counsel David Bellaire said.
SEC enforcement staff “could not cite a clear rule or regulation that had been violated” in its SCSD iniative, FSI maintains. “Instead, the SEC relied on previous settlements and past published guidance (which are statements of the staff’s view on a topic at a given time) to squeeze settlements from businesses,” the trade group representing the brokerage industry said in a release kicking off its #RegsWithoutRules reform campaign against the nation’s top securities cop late last week.