SEC notes on stricter rules for online brokers compared to game-like functions

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    (Bloomberg) – The US Securities and Exchange Commission has sent its strongest signal yet to tighten rules on online brokers by issuing a sweeping appeal for comment on how companies use game-like features and other tools to To attract investors.

    In a statement Friday, the Wall Street regulator said it was seeking information from market participants, consumer advocates and others about “digital engagement practices” closely tied to the mobile phone apps offered by Robinhood Markets Inc. and other companies. The SEC said it was concerned that such technologies put investors at risk.

    “While new technologies allow us greater access and product choice, they also raise the question of whether we as investors are adequately protected when we act and seek financial advice,” SEC chairman Gary Gensler said in a statement Friday. “In many cases, these characteristics can encourage investors to trade more often, to invest in other products or to change their investment strategy.”

    Robinhood’s rapid growth was fueled by the legions of customers it added during the Covid-19 pandemic and because it’s the go-to place for investors who buy hot meme stocks like GameStop Corp. want to act. But the same factors have drawn close scrutiny on Capitol Hill, with some lawmakers calling for SEC oversight to be tightened.

    The regulator said the comments received would enable it to assess whether the existing regulations are sufficient or whether it should pursue new requirements. The SEC will accept comments for 30 days.

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