Shutdown Delays SEC’s Annual Exam Priorities

SEC Proposes Scrapping Trade-Through Rule

The Securities and Exchange Commission on Thursday proposed rescinding a 20-year-old rule aimed at ensuring investors obtain the best available prices when executing equity trades. But eliminating the rule could put additional fiduciary pressure on asset managers when it comes to best-execution oversight, consultants said.

SEC Chair Paul Atkins, along with Commissioners Mark Uyeda and Hester Peirce – all Republicans – voted unanimously on proposed amendments to Regulation National Market System, which calls for rescinding Rule 611, known as the “trade-through” rule. The proposal, which includes a 60-day public comment period, would also eliminate Rule 610(e), which puts restrictions on locking and crossing quotations in stocks.

A trade-through occurs when a trading center executes an order at a price inferior to that of a protected quotation displayed by another trading center, according to the SEC. Rule 611 requires trading centers – national securities exchanges, alternative trading systems, over-the-counter market makers, and any broker-dealer that executes orders internally – to establish and enforce policies reasonably designed to prevent trade-through activity.

Atkins, who opposed the rule as a commissioner when it was first adopted in 2005, called it a “grave misstep” that has fueled the “proliferation of new trading venues” over the past two decades, “which in turn fragmented liquidity and created an increasingly complex, costly and opaque marketplace for order execution.”

“While the central aim of Rule 611 was to incentivize displayed liquidity, we have seen trading activity increasingly occur elsewhere over the last two decades,” he said.

Read more on what STP experts, Kaisha Schnoll and Pat Conroy had to say here. 

Investment Advisors Still Struggle With Fees, Conflicts, and Disclosures, SEC Warns

Investment advisors are struggling to meet bedrock fiduciary obligations around disclosing and mitigating conflicts of interest involving their compensation models, regulators are warning. The Securities and Exchange Commission this week published a risk alert summarizing findings from recent advisor exams that found advisors making incomplete or misleading disclosures, and sometimes omitting them entirely.

“As fiduciaries, investment advisors have an obligation to eliminate or at least to expose through full and fair disclosure all conflicts of interest which might incline an investment advisor—consciously or unconsciously—to render advice which was not disinterested,” the SEC says in the risk alert. The commission notes that the Division of Examinations “prioritizes” a review of firms’ various incentives structures in all of its routine exams.

SEC examiners found instances of advisors assessing fees at different rates than they described in disclosure materials, including the collection of asset-based fees on holdings that were explicitly excluded from those fees in the advisor agreement.

Some of the issues the SEC reported this week include how advisors are handling cash sweep arrangements with their affiliates. Examiners found that advisors sometimes automatically transferred clients’ idle cash to an affiliate to manage without disclosing all the details surrounding their revenue arrangements.

SEC Investment Management Director to Leave; No Successor Named

The director of the Securities and Exchange Commission’s Division of Investment Management, Natasha Vij Greiner, is leaving the agency, as SEC Chair Paul Atkins seeks to refocus the agency.

The SEC has not yet named a successor for Greiner, whose exit is effective July 4, leaving the investment management division’s priorities unclear, said Igor Rozenblit, a managing partner at Iron Road Partners.

As director of this division, Greiner has been responsible for administering the Investment Company Act of 1940 and the Investment Advisor Act of 1940, which oversees investment vehicles, companies and advisers, according to a press release from the SEC.

The reduced headcount adds to the uncertainty over the agency’s priorities, said Cynthia Kelly, managing director of compliance at STP Investment Services, in an email to FundFire.

“Hundreds of staff have taken voluntary buyouts or are exiting under cost-cutting pressures, raising concerns about institutional knowledge loss,” she said.

Read more on what Cynthia and other subject matter experts had to say here.

Lori Weston, Head of ComplianceAdvisor, Featured in InvestmentNews on Advisor Cyber Risk

We’re proud to share that Lori Weston, Head of ComplianceAdvisor at STP Investment Services, was quoted in a recent InvestmentNews article, “Schwab joins Fidelity in credential-sharing crackdown; Pontera escalates Fidelity blame” (November 10, 2025).

As major custodians take steps to limit third-party credential sharing, Lori emphasized the importance of ongoing due diligence and cyber risk assessments across all advisor technology relationships:

“Conducting ongoing due diligence on third-party vendors is essential to protecting sensitive client information,” Weston said. “While advisers often focus on their OMS and CRM systems, intermediary credential-sharing platforms that use actual client login credentials can pose even greater risks — enabling potential impersonation of account holders themselves and all permissions that go with account holder access.”

Her commentary reinforces STP’s commitment to helping advisors navigate an evolving compliance and cybersecurity landscape through proactive oversight and best-in-class managed services.

Read the full article on InvestmentNews