Investor advocate comes off the sidelines, gets into the regulatory game

A significant loss to my source list is now the Securities and Exchange Commission’s gain when it comes to oversight of investment advisers and brokers.

The agency last week announced that Barbara Roper, director of investor protection at the Consumer Federation of America, has been appointed as a senior adviser to SEC Chairman Gary Gensler.

During her 35-year career at the federation, Roper distinguished herself as an effective investor advocate who influenced legislation and regulations governing investment advisers and brokers.

She tended to throw many Republicans — and likely some moderate Democrats — off balance. There were times when Capitol Hill Republicans would refer derisively to Roper in public statements. They likely talked about her even more often in private.

Roper also had a neuralgic effect on brokerage industry lobbyists. Whenever she would push to reform aspects of the broker business model that put investors at risk, they would wince.

She could inflict pain on her opponents without scowling or saying a mean word. She operates with a smile, upbeat attitude and humor. That was her disposition every time I talked to her in a truly countless number of interviews over the past 11 years.

My biggest adjustment now that Roper has gone to the SEC is that I won’t be able to turn to her for insight — and zinger quotes — for my stories. She was my most accessible source. I could pick up the phone or send an email and know that Barb would be available immediately or very soon.

Unfortunately for me and many other reporters, she is now cloistered. When I reached out to Roper about her new SEC role, she said I should contact the SEC press office. An SEC spokesperson told me the agency wasn’t making Roper available for interviews at this time.

That won’t stop me from looking ahead to what might happen now that Roper has left the advocacy world and entered the regulatory game as an SEC insider. It will be like a TV or radio analyst for a professional sports team being hired as a coach for the squad. Let’s see if her critiques from the sidelines translate into wins on the field.


Even before she draws her first SEC paycheck, Barbara Roper has influenced how the agency under Gensler is approaching Regulation Best Interest, the broker advice standard that went into force more than a year ago.

Roper has been a vocal opponent of Reg BI, arguing that it is too weak to curb brokers’ conflicts of interest. She made that point in an April 19 letter to Gensler. She went on to criticize other parts of the Reg BI regulatory package — the interpretation of the Investment Advisers Act and the disclosure document known as Form CRS.

But she said it wasn’t necessary to rip up Reg BI and start over.

“Despite their many flaws, these regulations can provide a framework on which to build a more robust regulatory approach,” Roper wrote. “The primary goal should be to ensure that all investors who choose to work with an investment professional — whether that professional is a broker-dealer or an investment adviser — are protected by strong regulatory standards that require those financial professionals to place the customer’s interests first at all times.”

Roper had been making these points for months in comments to the media. They must have sunk in with Gensler.

In his first appearance before a congressional committee after being sworn in as chairman, he discussed Reg BI in a way that echoed Roper’s game plan. He said the agency would get the most out of Reg BI through examinations and enforcement and evaluate whether more improvements are needed. He didn’t talk about scrapping it.

Roper’s letter indicates the SEC “will define what constitutes acting in a client’s best interest” and “will result in more enforcement as the SEC looks at how broker-dealers mitigate potential conflicts as well as how they interact with clients,” Jaret Seiberg, managing director at Cowen Washington Research Group, wrote in a recent analysis.

It’s almost a certainty Gensler will determine Reg BI needs to be strengthened. He’ll turn to Roper on how to do it. In fact, he may rely to a great extent on his personal staff.

He’s brought on board a number of advisers before hiring directors of some SEC divisions, such as Investment Management and Trading and Markets.

Perhaps Gensler will operate like a president who relies more on West Wing senior staff than on cabinet secretaries to develop and execute policies. That would put Roper in an influential position inside SEC headquarters after decades of pressuring the regulator from the outside.

Brokerages that thought they could skate by Reg BI requirements are likely now worrying the rule actually will have teeth. Barbara Roper could provide the bite.

Active investment managers must consider ESG when building portfolios today

The post Investor advocate comes off the sidelines, gets into the regulatory game appeared first on InvestmentNews.

Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.

Andrew Vincent
Andrew is half-human, half-gamer. He's also a science fiction author writing for BleeBot.
%d bloggers like this: