SEC Commissioner Urges IAC to Enable Young Investors and Encourage New Technologies

SEC Commissioner Hester Peirce framed the challenges facing SEC Investor Advisory Committee ("IAC") members as they debate emerging issues on the intersection of technology and investing.

On the issue of social media as a source of investment advice, Commissioner Peirce urged the IAC to neither "stigmatize" nor "inhibit" how newer, younger investors receive, share and process information about investing. She said that such efforts "will not halt securities fraud, but [they] may discourage those investors from participating in and benefiting from our capital markets." She also cautioned the IAC not to "try to guard against fraud by choking off technologies that have benefited and could continue to benefit investors," but rather to "look for ways those new technologies can bring more investors into our markets."

On AI, Commissioner Peirce urged the IAC to avoid pursuing an aggressive agenda that could stifle the developing technology. She said that the SEC must thoroughly consider whether any new rules will in fact solve the problems that they are intended to solve. She said, "we should not rush into rule-writing without carefully identifying a problem that the rule is intended to solve." She urged the IAC to consider "how can the Commission reject its tendency for hidebound rigidity and create an environment in which innovators can flourish while remaining agnostic as to which innovations and innovators succeed?"

Ms. Peirce also raised several questions on draft recommendations involving self-directed investors and financial literacy. The purpose of these recommendation is to "ensure that investors receive the information they need to make sound investment decisions."