[co-author: Carlos Juarez]*
The Securities and Exchange Commission’s Investor Advisory Committee (the “Committee”) will meet on Tuesday, December 10, 2024, in an open meeting, that will stream on the SEC’s website. The Committee will first hear from two panels. The first panel, “Examining the Use of Mandatory Arbitration Clauses by Registered Investment Advisers,” will examine the use and scope of mandatory arbitration clauses by registered investment advisers (RIAs) and examine the impact of such clauses from the perspectives of various stakeholders. The panel will compare the use of mandatory arbitration clauses by state registered-RIAs and FINRA registered broker-dealers. The second panel, “Mainstreaming of Alternative Assets to Retail Investors,” will examine the various ways retail investors, who typically are not able to directly invest in alternative asset classes, are now able to do so through, among other vehicles, closed-end funds, interval funds, business development companies, non-traded REITs, and exchange traded funds.
The Committee meeting will close with a discussion and recommendation regarding the protection of investors in their interactions with “finfluencers”—individuals who leverage social media platforms to offer financial advice and promote investment opportunities. In its draft recommendation, the Committee recommends that the SEC:
- Engage in rulemaking and advocacy to close existing regulatory gaps in finfluencer oversight, which would include adopting a rule requiring certain disclosures related to finfluencer activity in providing investment advice regarding securities and advocating for Section 12 liability for misleading, deceptive, or fraudulent finfluencer conduct;
- Gather and publish data related to finfluencer misconduct;
- Issue guidance related to finfluencer activities;
- Provide and encourage investor education;
- Cooperate with other regulators and stakeholders to improve investor protection; and
- Study whether existing anti-fraud anti-manipulation provisions are sufficient to protect investors.
This is likely to be the last of the recommendations from the Committee during the Gensler SEC. Read the meeting agenda and the draft recommendation.
*Summer Associate
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