This is how a fintech Chief Compliance Officer explained it to me:
The industry that the SEC regulates is full of clever people who have a financial incentive to push rules as far as possible.
The concern is that if they provided a clear line between what is allowed and disallowed, that everyone will go right up to the line and then find creative ways to exploit how it’s defined.
The SEC prefers to keep the line fuzzy so that actors keep their behavior well on the “allowed” side.
The industry that the SEC regulates is full of clever people who have a financial incentive to push rules as far as possible.
The concern is that if they provided a clear line between what is allowed and disallowed, that everyone will go right up to the line and then find creative ways to exploit how it’s defined.
The SEC prefers to keep the line fuzzy so that actors keep their behavior well on the “allowed” side.