October 29, 2020

Jim Lundy Offers Insight to ThinkAdvisor about SEC-Issued Warning

Partner Jim Lundy was quoted by ThinkAdvisor in an article that covered the recent Securities and Exchange Commission (SEC)-issued warning on complex investment products.

On October 28, SEC chair Jay Clayton issued a warning about expanded access to self-directed accounts and complex investment products and how they’re marketed to retail investors. The agency also signaled tighter controls may be coming soon.

Lundy told ThinkAdvisor, “The SEC has disliked complex products being marketed to retail investors for some time; going back to when I was on the staff.” Lundy spent 12 years with the SEC from 2002 to 2014, where he worked at supervisory levels in both the Enforcement Division and the Office of Compliance Inspections and Examinations.

Lundy went on to note how the SEC’s warning could be bolstered by Regulation Best Interest.

According to Lundy, “They have a new weapon in their arsenal to combat this. When the SEC issues public statements like this, risk alerts, or FAQs, the examination and enforcement staff use these and the points made therein to support certain positions taken in examinations of registrants and enforcement investigations.”

Lundy noted that firms that do business in this area with retail investors “should analyze this public statement closely, apply it to their practices, and make improvements where necessary.”

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