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Against the backdrop of historically high levels of retail investor participation in the stock market, Democratic regulators in Washington are doing their best when it comes to the free market and consumer choice, and are getting in the way. They want your brokerage account.
Late last year, SEC Chairman Gary Gensler rolled out a series of far-reaching experimental reforms. If this reform is finalized by his SEC, it will fundamentally change the way retail investors trade stocks. These include a series of prescriptive government orders that stipulate where and at what price these trades must be executed.
Gensler argues that there isn’t enough competition to execute stock trades and you may not get the best theoretically possible price, so you need to act fast and act aggressively. I’m here.
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Never mind that data backed by retail investors’ real world experience in the market every day shows that retail investors have never had a better experience. Over the past few years, millions of Americans (many of whom are younger and more diverse than in previous decades) have used mobile phone apps to open brokerage accounts and choose the best option for themselves. I started investing at a very low cost using a strategy that I believe exists. their family.
SEC Chairman Gary Gensler’s new investment rules will hit investors hard. (Reuters/Jose Luis Magana)
So why the SEC’s sudden rush to upend and micromanage a market that has already worked so well for retail investors? Sachs’ partner Gensler’s motives seem to be based on the idea that Main Street America has no ability to choose how its money should be invested, and needs to invest its own money. is. A government that protects them from themselves.
The recent explosion in the number of retail investors participating in the stock market, punctuated by unusual retail trading activity in January 2021 and a market turmoil in memetic stocks, has led the SEC to now take the name of We provide a basis for action. of competition and investor protection.
Gensler’s rule, under the guise of increasing competition to execute retail trades on an “order-by-order” basis, by introducing significant friction in equities, reduced the self-directed brokerage model, and this model attacks millions of investors who use It squeezes brokerage revenues and makes brokerage platforms unattractive to retail investors.
The rule would be an extraordinary step toward centralizing the execution of stock trading for retail investors. ) 1975. Trust your government. they’re here to help. Remember when the Obamacare website worked so well?
Gensler’s campaign against independent brokerages and individual investors is evident in another series of extreme reforms Gensler plans to roll out later this year. .”
In other words, this means banning the usual 21st century means of communication used by countless businesses in a variety of industries, including insurance, banking, retail and e-commerce, healthcare, travel and leisure, entertainment, telecommunications, and more. Become.
The damage the SEC’s overreaching proposed rule will do to the stock market and retail investors could be very long-lasting.
If Gensler gets his way, the stock market will become less competitive, slower, more confusing and more expensive for Main Street investors. Brokers and other financial providers whose revenues are cut or eliminated by governments pass the costs on to their customers, offering innovative, low-cost products and services to the very people who need them most, including millions of people. You may respond by providing it to your customers. The number of Americans previously barred from the stock market.
At its core, billionaire and 65-year-old former Goldman Sachs partner Gensler’s motives are that Main Street America lacks the ability to choose how their money should be invested, leaving them alone. It seems to be based on the idea that we need to invest our money. A government that protects them from themselves.
Ultimately, many investors may decide it’s not worth the hassle and expense and exit the market altogether. In other words, the SEC is redlining our participation in America’s future. This is a true American tragedy, one that only big government can create.
This isn’t the first time the government has tracked an American’s brokerage account. In 2016, the Labor Department launched its own campaign against brokers offering advice to retirement savers by imposing a federal “fiduciary duty” on companies to act in the best interests of their clients.
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While it sounds pure and noble on the surface, the backlash from investors and other market participants was swift and resonated. Critics such as the U.S. Chamber of Commerce viewed the rule as a series of “theoretical academic exercises” and feared the rule would reduce “access to advice for small retirement savers and small businesses.” I have shown the data to show that there is.
![Biden administration rules will intrude into the investment lives of many Americans.File: Outside the New York Stock Exchange](https://a57.foxnews.com/static.foxnews.com/foxnews.com/content/uploads/2020/12/640/320/AP20310532457312.jpg?ve=1&tl=1)
Biden administration rules will intrude into the investment lives of many Americans.File: Outside the New York Stock Exchange (AP Photo/Mark Lenihan)
From the virtue signals used to justify the rule to its impact on Main Street investors, the parallels to the SEC’s current efforts targeting stock market brokers and their individual clients are striking.
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Fortunately, the Fifth Circuit Court of Appeals found that the Department of Labor “exceeded its regulatory powers” to promulgate an “unreasonable” rule, invalidating the fiduciary rule. If Gensler’s rule is adopted, the courts will once again be the last line of defense against paternalistic government agencies trying to replace the judgments of tens of millions of individual investors with their own.
Despite the recent market downturn, we are living in a golden age of retail investment. Gensler should stop interfering in the best markets in the world and stop trying to be a nanny for private investors. Instead, he has to go back to his office and do the actual work of the committee.