Commentary

Joanna Fields
Traders Magazine Online News

Navigating Cybersecurity on a Stretch of "Regulatory Rapids"

In this shared commentary, Aplomb Strategies writes that when considering a firm’s governance structure, a holistic approach makes the most sense.

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September 30, 2004

What's Next After Directed Brokerage?

By Gregory Bresiger

Directed brokerage was "unseemly" and "lowered the level of professionalism in the securities industry," according to Bill Singer, a long-time securities industry attorney and activist.

Singer also says the regulators are likely to move against other standard trading industry practices if "Wall Street doesn't clean up its act."

The Securities and Exchange Commission recently voted five to nothing to outlaw the controversial practice in which fund managers send trades to brokerages that sold their funds to retail investors.

"Putting it behind us is just the right thing to do. Prohibiting directed brokerage makes sense," according to SEC Commissioner Harvey Goldschmid. What could be next in the SEC's crosshairs? Possibly 12b-1 fees or maybe soft-dollar arrangements?

"It's basically up to the industry to clean up practices that are hurting the retail investor and the rest of Wall Street," Singer says. "This latest SEC action serves notice that it is ready to move in a number of areas."