Paul Kiernan

speaker

175 appearances 3 recordings 1 series first heard Jun 2018 last heard Aug 2021

Paul Kiernan’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Robinhood, Other Online Trading Apps Draw SEC Attention · 31 Aug 2021 podcast

It's not only looking at brokers, it's looking at investment advisors, which are kind of regulated by a separate category of SEC providers.

rules and what investment advisors are allowed to do is provide advice, which is a little bit different from a recommendation, but it still requires them to really act in the interest of the client.

If they're recommending stocks or investments that are going to result in a super high commission for the broker slash advisor,

There might be better options out there or they're not really suitable for an investor, you know, that could put them into some trouble.

And, you know, going back to your earlier question about GameStop and AMC, one of the things that the SEC is really looking hard at is whether these so-called digital engagement practices are effective.

aimed at getting investors to trade more frequently because a lot of brokerages, not all of them, obviously, but Robinhood is a very well-known example.

I think Charles Schwab does the same thing.

They sell their customers order flow to high-speed traders in exchange for payments.

It's a model called payment for order flow.

And so a lot of these new brokerages actually make more money the more their customers trade.

SEC Chairman Gary Gensler has said this looks a little bit like a conflict of interest.

So they're looking very hard at that.

And if they feel that brokerages are making, you know, recommendations, quote unquote, to their clients with a view toward getting them to trade more frequently, it could be problematic.

Well, we don't know.

I mean, we don't know what sorts of rulemakings this could lead to, but the SEC has used its bully pulpit over the past year or so to kind of caution the industry away from doing certain things.

And so one of the features that has been discontinued on Robinhood's app

is the use of digital confetti to celebrate milestones in a user's account.

You fund an account, you get confetti splashed across your screens.

You make your first trade, you see confetti.

And so in a word, one possible outcome of this is maybe it makes the trading experience a little bit less fun or exciting, a little bit more boring.

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