Speech by SEC Commissioner:
"Amplifying the Voices of Investors: The Work of the Investor Advisory Committee"
Commissioner Luis A. Aguilar
U.S. Securities and Exchange Commission
Investor Advisory Committee Meeting
May 17, 2010
Good Morning. I am Commissioner Luis Aguilar and I would like to extend a warm welcome to all the members of the Committee who are with us today and to those that may be participating by webcast.1
Today, we are kicking-off the fourth meeting of the Investor Advisory Committee. As a Commissioner, I am very proud that we have established a body focused on the needs and voices of investors. Each of you represents different constituencies but at the end of the day you are united in your mandate to consider what is in the best interests of investors. It is true that most investors are not able to mobilize policy positions, ask for meetings with Commissioners, or make their needs known as compared to other groups we see at the Commission. Accordingly, the Investor Advisory Committee is an important mechanism to empower investors by amplifying their voices and highlighting their needs.
Your mandate is broad and the responsibility to serve on this Committee is great. Thank you for answering the call to service. Since the Committee's formation in July 2009, the financial services regulatory landscape has only grown more complicated and in dire need of investor representation. Today, we look out to a horizon that includes potential significant legislative change in the near future, coupled with serious inquiries into how investors are treated and whether the existing market structure is fair and transparent.
These inquiries were thrown into sharp focus on May 6, when we experienced a severe market break. Investors and others in the public are asking themselves a series of questions that demand answers including:
- What happened?
- Why did these events occur?
- How did the existing market structure exacerbate and/or facilitate the market break?
- Is there too much emphasis on speed rather than on quality of execution?
- Should there be an ability to break trades? What is the dividing line between the winners and losers?
The SEC and other regulators are examining the events that occurred on that day and how to prevent similar events from occurring. It is a significant allocation of resources and we are committed, as soon as we have findings, to make them public.
Amidst this issue-filled landscape, the Commission itself is undergoing great internal examination and change, and it recognizes that the need to hear the voices of investors is greater than ever. This Committee is one of the important ways that the Commission can obtain the information to fulfill its role as "the investor's advocate."
As we saw during the Committee's last meeting, the Committee has moved beyond the threshold organizational hurdles and has begun the hard work of grappling with important issues. In fact, at the last meeting, the Committee made its first two unanimous recommendations to the Commission. These recommendations involved Regulation FD and Proxy Voting Transparency.
The first Committee resolution recommended that the SEC staff issue interpretive guidance to suggest ways in which issuers can address Regulation FD compliance concerns that arise from the selective disclosure of material corporate governance information in private meetings with investors.
The second Committee resolution recommended that the SEC staff, as part of its review of the U.S. proxy voting system, study the costs and benefits of mandating a standardized tag-data format for certain proxy and proxy voting filings.
The work of this Committee and its Subcommittees continues and today's agenda reflects this continuing work on matters of importance to investors. Today, among other items, we will:
1) Hear from author Dan Ariely about the factors that drive investor-decision making;
2) Have a panel discussion on mandatory arbitration;
3) Have a presentation regarding Money Market Funds; and
4) Hear an update from the Education Subcommittee on their efforts and make a recommendation for the full Committee to consider.
This will clearly be a full day and I'm anxious for it to get started. I'm sure there will be robust discussions on today's topics and I look forward to the discussions ahead.
Additionally, I would like to emphasize to members of the public that the Committee welcomes your thoughts. All comment letters are submitted for the Committee's consideration. Since our last meeting, the Committee has received a number of comment letters from members of the public involving a wide range of issues — ranging from ESG commentary to the need for global coordination. These letters have been distributed to the Committee, and will help inform its discussions today and into the future. The Committee welcomes the views of all interested parties; and in fact, our web site expressly invites comments in relation to each of the Committee's meetings. Just go to www.sec.gov, click on "Spotlight" and then "Investor Advisory Committee," and you will see the link for submitting comments.
In closing, I want to express my continuing appreciation to everyone for devoting time to this important endeavor. Particularly, I want to thank both the members of the Committee and the SEC staff that support these efforts.
Thank you and let's get started.