The Massachusetts securities division is asking New York-based Betterment to amend its communication practices so that all clients — be they institutional, retirement, or retail — receive equal treatment. The regulator wants to receive a copy of the amended practices by September 30.
The request, contained in a letter from Carol Anne Foehl, associate director of the registration, inspection, compliance and examinations section of the Massachusetts securities division, dated September 14, was first reported by The Wall Street Journal.
It relates to Betterment’s decision to delay the start of trading on June 24 following the surprise “yes” vote by U.K. citizens favoring a U.K. exit from the European Union. Global stock markets plummeted on the news, which led Betterment to halt trading on behalf of clients.
Betterment spokesman Joe Ziemer told ThinkAdvisor at the time that “the right thing to do for our customers, both retail and institutional, was to wait and see how market conditions evolve during this extraordinary event.”
The problem, according to Massachusetts regulator, was that Betterment didn’t treat its retail and institutional customers equally.