Published on May 15th, 2024 |

The Marketing Rule and the Public Good | Gary Gensler Takeaways

SEC RELEASES

Introduction

SEC Chair, Gary Gensler, recently spoke at the 11th Annual Conference on Financial Market Regulation.

In his speech, he provides some insight into how the SEC leadership values accurate information for investors in financial markets.

With the recent SEC Marketing Rule Alert and relevant SEC enforcements occurring within the past month, the Marketing Rule is receiving a continued increase in the amount of attention amongst compliance officers.

There are key takeaways from Gensler’s talk that suggest the SEC could increase its investigation into the way Firms advertise.

Key Takeaways

Key Takeaways

  • Gensler sees no market incentive for private firms to create a reliable, accurate, and accessible data source for investors.
  • Because information about securities is a public good, Gensler believes that market-based incentives would lead to an “under-production of the public good of information”.
  • The SEC has at least four important areas to promote data as a public good:
    • Mandatory disclosure from issuers has historically been important for investor trust in public companies, and the SEC will continue to add requirements to adjust to emerging risks.
    • Transparency for market participants through beneficial ownership holding, annual audited financial statements, and institutional investment manager holdings,
    • Transparency for market transactions so the public gets to see the details post-trade of what price a security was sold for.
    • Research Reporting and economic analysis of regulatory decisions by the SEC, along with general economic research to promote transparency and understanding, with the goal of making data more accessible for the public.

Vigilant's Conclusion

Vigilant’s Conclusion

It can be anticipated that the understanding of data as a public good will have impacts on the actions of regulators, particularly involving marketing.

As the SEC continues to have record setting enforcement years in 2022 and 2023, we anticipate that 2024 could continue on this trend.

It is vital that Firms assess their marketing practices and ensure that proper policies and procedures are implemented to reasonably enforce compliance with the Marketing Rule.

For any questions or concerns you may have, please reach out to us today.

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