I have recently been made aware of the FINRA proposed rule #22-08, and it has me concerned for investors for the following reasons listed below. In summary, I believe if this rule is codified it will hurt investors more than help investors, will hurt the economy around investing in America, and is simply against the freedoms granted to us as being an American citizen.
1) The spirit of this rule seems to be far more authoritative than it needs to be. Now more than ever retail investors have the ability to educate themselves on the risks of each product they choose to invest. The risk of any profits or losses is currently borne by the investors, and that is how investing should remain. It is not up to the regulators to limit retail investors through onerous barriers to investing, but rather provide retail investors with the proper education and disclosures and then let American citizens invest how they see fit.
2) Retail investors are educated enough to understand that leveraged and complex products are meant to be short term investment vehicles.
3) One of the greatest things about America is the ability for people to generate wealth as they see fit. Similar to point # 1, in a capitalist society such as America, retail investors should be able to generate wealth and risk their wealth as freely as possible. While it is the job of regulators to oversee this activity and provide the public with confidence that they can invest fairly, it is not the regulators' job to decide for the retail investors and force them to invest in products that might not be suitable for all situations
3) If leveraged and complex funds have significant barriers to investing, or at worst, are only accessible by high net worth individuals, then retail investors will simply try to create those strategies themselves, move into higher risk investments (which may be less regulated), or move their investment money out of America. Currently investing in the United States stock, bond, options, and futures markets is the best decision an investor can make. However, if what an investor can invest in is decided for them then retail investors will simply take on more risk and invest in other less regulated products. The effect of this rule will backfire and make retail investors less confident in investing in the United States
4) The logistics of regulating a rule such as this will be extremely inconsistent. As the rule is currently written the definition of a "complex" product is extremely vague. This will create significant work on the regulators and brokers in complying with this rule, which will further remove investors' money from investing in regulated, safe markets in the United States and to more dangerous, less regulated, and foreign markets.
I hope you will consider my points above as a reason not to carry forward with codifying this proposed rule, as, in summary, it will have the opposite effect of what it is trying to accomplish and make investors less confident in investing in America. If you have any questions or concerns please feel free to reach out and I would be happy to help.
Mark Wiedelman Comment On Regulatory Notice 22-08
Dear FINRA,
I have recently been made aware of the FINRA proposed rule #22-08, and it has me concerned for investors for the following reasons listed below. In summary, I believe if this rule is codified it will hurt investors more than help investors, will hurt the economy around investing in America, and is simply against the freedoms granted to us as being an American citizen.
1) The spirit of this rule seems to be far more authoritative than it needs to be. Now more than ever retail investors have the ability to educate themselves on the risks of each product they choose to invest. The risk of any profits or losses is currently borne by the investors, and that is how investing should remain. It is not up to the regulators to limit retail investors through onerous barriers to investing, but rather provide retail investors with the proper education and disclosures and then let American citizens invest how they see fit.
2) Retail investors are educated enough to understand that leveraged and complex products are meant to be short term investment vehicles.
3) One of the greatest things about America is the ability for people to generate wealth as they see fit. Similar to point # 1, in a capitalist society such as America, retail investors should be able to generate wealth and risk their wealth as freely as possible. While it is the job of regulators to oversee this activity and provide the public with confidence that they can invest fairly, it is not the regulators' job to decide for the retail investors and force them to invest in products that might not be suitable for all situations
3) If leveraged and complex funds have significant barriers to investing, or at worst, are only accessible by high net worth individuals, then retail investors will simply try to create those strategies themselves, move into higher risk investments (which may be less regulated), or move their investment money out of America. Currently investing in the United States stock, bond, options, and futures markets is the best decision an investor can make. However, if what an investor can invest in is decided for them then retail investors will simply take on more risk and invest in other less regulated products. The effect of this rule will backfire and make retail investors less confident in investing in the United States
4) The logistics of regulating a rule such as this will be extremely inconsistent. As the rule is currently written the definition of a "complex" product is extremely vague. This will create significant work on the regulators and brokers in complying with this rule, which will further remove investors' money from investing in regulated, safe markets in the United States and to more dangerous, less regulated, and foreign markets.
I hope you will consider my points above as a reason not to carry forward with codifying this proposed rule, as, in summary, it will have the opposite effect of what it is trying to accomplish and make investors less confident in investing in America. If you have any questions or concerns please feel free to reach out and I would be happy to help.