September 30, 2021

Toomey to SEC: Don’t Restrict Investor Freedom Under the Guise of Investor Protection

Washington, D.C. – U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) is urging the Securities and Exchange Commission (SEC) not to impose new regulations on digital trading technologies that restrict investor freedom under the guise of investor protection. After the GameStop trading frenzy earlier this year and the rise of Robinhood’s mobile trading app, the SEC solicited public comments on digital trading technologies.

In a new letter to SEC Chairman Gary Gensler, Senator Toomey reiterated that it is not the government’s role to tell retail investors what they can and cannot purchase, including through restrictions on digital platforms. Moreover, federal securities laws do not authorize the SEC to act as a merit regulator and limit the choices of investors in the absence of fraudulent or manipulative conduct.

“While I appreciate the SEC’s review of digital trading technology, I urge the SEC to proceed cautiously and avoid the temptation to pursue paternalistic regulations that restrict investor freedom under the guise of investor protection,” Toomey wrote.

New innovations like user-friendly mobile apps, commission free-trading, no minimum account balances, and low-fee mutual and exchange-traded funds have empowered millions of Americans to share in the tremendous wealth gains generated by the stock market.

“It has never been easier, cheaper, or more convenient for a person of modest means to invest in—and share in the gains of—the stock market,” Toomey continued. “That is why I am concerned by suggestions in the SEC’s request that ‘digital engagement platforms’ . . . may harm retail investors by encouraging strategies that carry additional risk, such as frequent trading, options trading, trading on margin, or other kinds of trading in complex securities products.”

To read Ranking Member Toomey’s full letter, click here.