The Securities and Exchange Commission’s new Retail Strategy Task Force will use data analytics to root out misconduct “occurring at the intersection of investment professionals and retail investors,” namely mutual fund share class and wrap-fee account abuse, Stephanie Avakian, co-director of the agency’s enforcement division, said Thursday.
Avakian, speaking at the Securities Enforcement Forum in Washington, said that the retail task force will zero in on “the many ways that retail investors intersect with the securities markets and look for widespread misconduct,” drawing on the agency’s “experience in the retail space and elsewhere to identify strategies that have worked well for us across all kinds of cases, particularly those in which we used data analytics and technology.”
The unit, she continued, will “then apply those strategies and investigative techniques more broadly to look for incidents of widespread misconduct targeting retail investors.”
SEC Chairman Jay Clayton announced the creation of the retail unit along with a new Cyber Unit during his Sept. 25 testimony before the Senate Banking Committee.
The SEC, Avakian explained, is “increasingly able to identify threats to retail investors — everything from registrant-based threats to microcap-based threats — through the use of data analytics.”
Technology can be used to “slice and dice data and apply analytics to look for all kinds of problems — by product, by investor type, by location, by sales or trading practice, by fee, you name it,” she said.