SEC to Gather Data on Unregistered Advisors, Brokers

The Securities and Exchange Commission is mulling compiling data on people who are not registered as advisors or brokers in order to catch more incidences of fraud, the agency’s chairman said.  

At an event held Thursday at the Brookings Institution in Washington, SEC Chairman Jay Clayton said that there is a “data set” on bad brokers and advisors — as compiled by the agency and the Financial Industry Regulatory Authority — but “there’s actually not a data set out there for people who are not registered as advisors or brokers. We’re trying to work on pulling a data set for those types of folks.”

Clayton said that the “amount of garden-variety retail fraud surprises me and really bothers me,” adding that he’s asked the various SEC divisions “to look at this.”

Clayton said that the agency is also “looking at changing” the types of data the agency gathers in the areas of “custody and transfer agents.”

During his testimony before the Senate Banking Committee Tuesday, Clayton said he was “worried” about the amount of retail fraud, and noted the agency’s recent launch of a Retail Strategy Task Force that will work to identify misconduct impacting retail investors — from everything involving the sale of unsuitable structured products to microcap pump-and-dump schemes. 

He’s set to testify before the House Financial Services Committee on Wednesday.