The on broker-dealers that provide clients with recommendations, combined with the potential great diversity of state regulation, is a blow to the business model of "full-service brokerage." (See for additional commentary on how Reg. BI may affect full service brokerage.)

Firms continuing to provide a full-service brokerage option to retail customers will need to review their procedures for dealing with retail customers very thoroughly.

Mr. Kothari's remarks illustrate a policy tension created by the collection of big data by the financial regulators. On the one hand, the aggregation of tremendous amounts of data by the regulators will be vulnerable to theft by bad actors. On the other, the Consolidated Audit Trail will allow regulators to collect an unprecedented amount of information, which will be a target for bad actors.

Regulators continue to pretend that investors can receive the benefit of a dedicated investment adviser while paying (low) transaction based fees. (See also .) That seems inconsistent with economic reality. The result is a move to a system where broker-dealers either decline to provide their clients with recommendations or provide only very generic advice; if investors want more, they will have to pay an investment adviser. Maybe this would be a good result, but the regulators should not…

Encouraging retail investors to spend time educating themselves to vote in proxy contests is not a productive exercise for regulators. It would make more sense for the SEC to focus on the voting patterns and incentives of institutions, such as registered investment companies and pension plans, that hold stocks for the benefit of retail investors. Retail investors who are studying up on how to vote in a proxy contest may want to consider spending more time playing video games, watching…