By BRENT MARTIN
St. Joseph Post
ST. JOSEPH, Mo. — Investors would have to be told their money is being invested to achieve a social goal under a new rule being proposed by the Missouri Secretary of State.
Secretary of State Jay Ashcroft claims some financial advisers have been investing client funds in accordance with social causes without consulting their clients.
“This rule puts the onus on investment advisers or broker dealers to make sure that they are fully disclosing why they are suggesting an investment to their customer,” Ashcroft tells KFEQ/St. Joseph Post in a phone interview. “And if they do not fully disclose to their customer, it is fraud and there are serious penalties for that. And we’re happy to be a part of punishing people that would defraud Missourians.”
Ashcroft claims some financial advisers have been investing client funds to support social, environmental, or governmental causes without making full disclosure to their clients.
Ashcroft says there is nothing wrong with investing toward a purpose.
“I believe that the investor should make the decision and they should have full disclosure to make an educated decision and whatever they want to do with their money, that’s their choice,” Ashcroft says. “They earned it, they built it, not the government.”
Ashcroft has opened a 30-day comment period to give opinions on the proposed rule.
“We will collect all those comments. There’ll be a public record of all comments,” says Ashcroft. “Then we will go through every one of those comments to see if there are any good ideas, maybe there are things, ah, maybe it sounds a little better if we do that or maybe this is easier to understand. We will look to those comments to see for ways to make the rule better.”
The proposed rule would require advisers to make the disclosure. If they do not, it could be prosecuted as fraud.
To comment, go to the Secretary of State’s website to view the proposed rule, which is actually divided into two sections. Scroll through the proposed rule and information on how to leave a comment is contained at the end.
Click HERE to be taken to the proposed investment rule.