Commission Investor Education Plan Approved; Investor Education Organization Leaders Named


Washington, D.C., March 25, 2004 -- The Securities and Exchange Commission announced today that the Honorable William H. Pauley III, United States District Judge for the Southern District of New York, has approved the Commission's Investor Education Plan, which calls for an unprecedented initiative to fund investor education programs nationwide. The Commission proposed its Plan in connection with the $1.4 billion global settlement of the SEC enforcement actions against ten of the nation's top investment firms and two individuals alleging undue influence of investment banking interests on securities research at brokerage firms (the Global Settlement).

Under the Commission's plan, a non-profit organization will be created and funded with $52.5 million over five years from funds that seven of the firms that participated in the Global Settlement agreed to pay as part of the settlement with the SEC, the NASD, and the New York Stock Exchange. The organization is designed to equip Americans with the knowledge and skills necessary to make informed investment decisions. The Judge's Order notes that the entity "will benefit the entire nation at a time when increasing numbers of American households are investing in the equity markets." In separate Orders issued earlier this week, the Court appointed Charles D. Ellis as the Chairman of the Board and George G. Daly as the Executive Director of the new organization.

"This new effort will greatly help American families achieve financial security and protect them from financial abuse," said SEC Chairman William H. Donaldson. "Charley and George are absolutely the right people for this important job. I'm confident that under their leadership, the new Investor Education Entity will become a national treasure that will benefit investors for years to come."

Ellis is a Senior Advisor and a Director of Greenwich Associates, an international business strategy firm he founded in 1972 and is also currently associated with a group called "Partners of 63," a pro bono organization established by members of Harvard Business School's class of 1963 to promote worthy educational initiatives. He is also the author of a number of books, including "Winning the Loser's Game, Timeless Strategies for Successful Investing." Daly is the Albert Fingerhut Professor of Business Administration at the Stern School of Business of New York University and was the Dean of the Stern School from 1993 to 2002.

Ellis will oversee a 5-7 person board which will make all decisions as to the recipients of the investor education money. The Board will seek and consider grant proposals for projects such as grass-roots and community based education, work place investor education initiatives, academic research into techniques or programs most likely to be successful, and programs to educate American investors about how to avoid fraudulent investments.

Under the Judge's prior Order of Oct. 31, 2003, the Court had ordered that $52.5 million of the settlement funds would be paid over a period of five years into a new investor education entity. The entity will be organized as a tax-exempt organization and structured so that it can receive additional funds in the future from sources other than the investor education funds paid by the investment bank defendants.

See Also:  Order Approving the Investor Education Plan (March 25, 2004); Order of Appointment of the executive director of the investor education entity described in the settlements (March 24, 2004); Order of Appointment of the chairman of the investor education entity described in the settlements (March 22, 2004)
Last modified: 3/26/2004