What risks are present for investment platforms, investment advisory firms and broker-dealers in retail investing?
Investment platforms, investment advisory firms and broker-dealers (collectively “Financial Services Providers”) all face exposure to fines from regulators as well as litigation from investors. Regulatory agencies including the Consumer Financial Protection Bureau (“CFPB”), Securities and Exchange Commission (“SEC”), and Financial Industry Regulatory Authority (“FINRA”) can impose large fines and file lawsuits against Financial Services Providers for violation of industry specific rules and federal laws. The costs of these regulatory actions can reach billions of dollars. Financial Services Providers need a better method of protection to defend against regulatory actions and disputes filed by their investors.