Don’t let the SEC snatch funds from middle-class investors

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In recent speeches, President Trump hailed deregulation as key to fueling big economic gains for all types of workers. Mr. Trump reminded Americans in his 2020 State of the Union address that his administration has been “slashing a record number of job-killing regulations” and has been moving forward with a “bold regulatory reduction campaign.” 

But a recent proposal from the Securities and Exchange Commission (SEC) is making some wonder if SEC Chairman Jay Clayton hears the president’s deregulatory message. Over the objections of the SEC’s two other Republican commissioners appointed by President Trump, Mr. Clayton has proposed a regulation that could effectively ban many middle-class investors from buying mutual funds and exchange-traded funds that have been sold on the U.S. stock market for decades. As noted by a recent coalition letter signed by several conservative and free-market groups — including the Competitive Enterprise Institute, Heritage Action for America, and Americans for Tax Reform — “Not only do these rules clash with the Trump administration’s goal of freeing the economy with less red tape, they would foster further inequality in financial markets by potentially making certain mutual funds and exchange traded funds unavailable to the average American investor.”

If it goes into effect, the regulation would cripple investors’ ability to buy dozens of funds they can now purchase on American stock exchanges for zero-dollar commissions from discount brokerages and investing apps such as Robinhood. Under the regulation, investors could not purchase these funds unless they can answer an extensive questionnaire of highly personal questions about their investing knowledge and household assets to the SEC’s satisfaction. SEC Republican Commissioners Hester Peirce and Elad Roisman have blasted the regulation as a “blunt overly paternalistic approach to investor protection.”

Read the full article at the Washington Times.