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In brief

The US Securities and Exchange Commission (SEC) recently published a request for information and comment on how broker-dealers and investment advisers use digital engagement practices (DEPs) — behavioral prompts, differential marketing, “gamification,” and other design elements and features that firms use to engage with retail investors through digital platforms and mobile applications.  

The SEC seeks input about the current use of DEPs, tools and methods such as predictive data analytics and artificial intelligence/machine learning models that firms may use to operate and customize DEPs based on investor behavior or characteristics, and how DEPs interact with existing regulatory requirements for broker-dealers and investment advisers. The SEC is also focused on how investment advisers use technology to develop and provide advice both through digital programs and more traditional advisory services.

Comments are due on 1 October 2021.


Click here to download the Full Alert.

Author

Jennifer Connors is a partner in Baker McKenzie's Financial Regulation and Enforcement Practice Group. She represents broker-dealers, investment advisers, alternative trading systems (ATSs), private fund managers, financial technology (FinTech) companies and other market participants on securities law and market regulation matters.

Author

Amy serves as the Co-chair of Baker McKenzie’s North American Financial Regulation and Enforcement Practice, which provides our clients with a full range of regulatory advice and enforcement counseling. Previously, Amy has served as chief litigation counsel at the US Securities and Exchange Commission's (SEC) Philadelphia regional office and managed a team of lawyers overseeing a wide variety of enforcement matters and investigations.

Author

Jennifer L. Klass serves as the Co-chair of Baker McKenzie's Financial Regulation and Enforcement Practice in North America. Jen is an experienced investment management lawyer with particular focus on investment adviser regulation and the convergence of investment advisory and brokerage services. She regularly represents clients before the US Securities and Exchange Commission (SEC), both in seeking interpretative guidance and in managing examination and enforcement matters. Jen is a leading practitioner in digital investment advice and the use of FinTech in the asset management industry. Jen provides practical advice that is informed by her experience as Vice President and Associate Counsel at Goldman, Sachs & Co., where she represented the asset management and private wealth management businesses.

Author

A. Valerie Mirko is a partner in Baker McKenzie’s Financial Regulation and Enforcement Practice Group in North America. Valerie has substantial experience in federal and state securities laws and regulations affecting the financial services industry, with a focus on the investment adviser and brokerage industries. Valerie has a background in both regulatory advice and enforcement counseling. Immediately prior to joining the Firm, Valerie was General Counsel of the North American Securities Administrators Association (NASAA). As General Counsel, Valerie advised NASAA’s Board of Directors on developments in the federal securities laws and their impact on state securities regulations. Valerie provided advice on, among other areas, the SEC Regulation Best Interest rule set, fiduciary duty/standards of care, preemption, retail enforcement issues, investment adviser oversight, and data privacy. She also supervised all of NASAA's securities-related legal work and was a resource on multistate enforcement investigations and settlements. Valerie also provided governance support on key NASAA Regtech projects and regulatory coordination initiatives between state and federal regulators. Valerie was a frequent speaker at regulator-only roundtables and training events. Earlier in her career, Valerie advised broker-dealers and investment advisers on regulatory matters and enforcement investigations as an associate at a Washington law firm and held legal and compliance roles at Oppenheimer & Co., Inc., and Merrill Lynch (now BofA Securities). Valerie is currently a member of the adjunct faculty at the George Washington University Law School and a subcommittee chair within the DC Bar Corporation, Finance, and Securities Law Community.

Author

Gavin Meyers is an associate in Baker McKenzie's Financial Regulation and Enforcement Practice Group in North America. Gavin is an experienced regulatory lawyer with a focus on federal and state securities laws impacting the broker-dealer and investment adviser industries. Immediately prior to joining the Firm Gavin was an Assistant General Counsel with Raymond James, and previously served as Senior Counsel in the Office of General Counsel at the Financial Industry Regulatory Authority (FINRA). As Assistant General Counsel with Raymond James, Gavin provided practical guidance to business, supervision, and compliance groups regarding securities regulations and FINRA rules, including with respect to implementation of the Securities and Exchange Commission (SEC)'s Regulation Best Interest. As Senior Counsel at FINRA, Gavin was responsible for providing guidance on complex regulatory initiatives and FINRA rules and developing and drafting regulatory guidance and rule filings for submission to SEC. Gavin also served in FINRA's Office of Fraud Detection and Market Intelligence (OFDMI), where he conducted regulatory investigations involving insider trading.

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