SEC Chair Gensler Says Payment For Order Flow Is Conflict Of Interest: 'It's Not A Level Playing Field' For Retail Traders - Apple (NASDAQ:AAPL)


SEC Chairman Gary Gensler was asked some hard-hitting questions by podcast host Jon Stewart. Many of the answers centered on Gensler wanting to do the right thing, but being resource constrained. Here’s a summary of the conversation.

What Happened: Former Daily Show host Jon Stewart asked Gensler questions about dark pools, direct share registration, naked selling, and crypto regulation.

Stewart voiced frustration from retail traders who submitted questions for his podcast “The Problem With Jon Stewart,” which is part of his deal with Apple Inc AAPL for a show on AppleTV+ of the same name.

Discussing direct share registration, Stewart asked, “Why not just register each stock purchase?”

Gensler put the blame on the system already in place.

“Most shares in the U.S., the majority of shares in the U.S., are held in the broker’s name,” Gensler said.

Gensler said he shares the frustration of retail investors, but things move slow.

“Part of it is the suite of rules that I hope we propose in the near term.”

Stewart asked Gensler about payment for order flow, a controversial practice used by stockbrokers to send trades to a market maker for execution in exchange for payment. Stewart asked Gensler if this was a conflict of interest.

“It is a conflict,” Gensler answered.

Gensler also admitted that when it comes to the stock market, “it’s not a level playing field.”

Stewart asked Gensler why the SEC can’t ban payment for order flow if it is a conflict.

Gensler again pointed to being resource-constrained and not being able to target some of the guilty parties in this case.

Related Link: SEC Takes Aim At Retail Investors, Meme Stocks In New Video 

Why It’s Important: The interview with Gensler helped share some frustrations of retail investors, but gave little in terms of answers from the SEC Chairman.

“The frustration isn’t what you’re doing, it’s what you’re not doing,” Stewart said.

Stewart noted that Gensler and the SEC are frustrating to retail investors because they’re going after people like Kim Kardashian instead of big financial institutions.

“We’re holding people like Ms. Kardashian accountable,” Gensler said.

Stewart argued that the SEC should be doing more to make the market less dangerous, instead of making videos showing that meme stock investors need to do more research.

“I believe we’re trying to do both,” Gensler added. “We’re doing both and all of the above within our resources.”

Gensler added that the SEC levied fined on Barclays, Allianz and Boeing after violations against shareholders.

The SEC Chairman added that changes in law from Congress and more resources for the SEC could help going forward.

Photo: Courtesy of Third Way Think Tank on flickr


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