Casten Applauds Proposed SEC Digital Engagement Rule
Washington, D.C. — U.S. Congressman Sean Casten (IL-06) released the following statement regarding the SEC’s recently proposed Digital Engagement Rule:
“As digital investment tools turn themselves into virtual casinos designed to harness human psychology against the best interest of the investor, legislators and regulators have a duty to address the potential conflicts of interest raised by predictive data analytics.” said Rep. Sean Casten. “As an advocate for stronger investor protections, particularly in the wake of tragedy in my own community following Robinhood’s failures, I’m pleased to see this proposal from the SEC and urge them to swiftly finalize the strongest rulemaking.”
Rep. Casten has been the Congressional leader against Robinhood’s failure to protect investors since June 2020, when Alex Kearns, a 20-year-old-resident of the Naperville Illinois community Casten represents, died by suicide after seeing a negative balance of more than $700,000. In a suicide note, Kearns named Robinhood, asking how it allowed a novice trader to get into that position.
After Casten learned that Robinhood failed to respond to Alex Kearns repeated inquiries and, at that time, did not have a customer support phone number for Alex to call, he led his Congressional colleagues in efforts calling on Robinhood directly to improve transparency and user safety and urging federal regulators at SEC and FINRA to take action to protect investors, before grilling Robinhood CEO Vlad Tenev when he appeared before the House Financial Services Committee in February.
In March 2022, Rep. Casten pushed SEC Chairman Gary Gensler to update regulation to protect investors during the third House Committee on Financial Services Committee (FSC) hearing on Gamestop, digital platforms, and retail investors. Rep. Casten pointed out incentivizing retail investors to trade frequently is usually not in their best interest. In July 2022, Casten’s Trading Isn’t a Game Act passed the House Financial Services Committee on the same day as Robinhood’s Initial Public Offering.
Rep. Casten also introduced the SEC Disclosure Effectiveness Testing Act in 2022 which would require the Securities and Exchange Commission (SEC) to ensure main street investors – including those on day trading apps like Robinhood – have the information they need to invest their savings safely. The bill would also require the SEC to engage in usability testing of its new and existing disclosures intended for retail investors in the form of qualitative interviews and surveys.
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