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U.S. Securities and Exchange Commission

Securities and Exchange Commission Investor Advisory Committee
Minutes of January 18, 2013 Meeting1

The Investor Advisory Committee convened its January 18, 2013 meeting at 10:00 a.m. in the multipurpose room of the Securities and Exchange Commission’s headquarters in Washington, D.C.  The meeting lasted until approximately 3:30 p.m. and was open to the public, except for non-public subcommittee meetings.  Those attending were:

Commissioners of the Securities and Exchange Commission

Chairman Elisse Walter (morning session only)
Commissioner Luis Aguilar (morning session only)

Advisory Committee Members

Darcy Bradbury
J. Robert Brown, Jr.
Joseph Dear
Eugene Duffy
Roger Ganser
Craig Goettsch
Joseph Grundfest
Mellody Hobson
Stephen Holmes
Adam Kanzer
Roy Katzovicz
Barbara Roper
Kurt Schacht
Alan Schnitzer
Jean Setzfand
Anne Sheehan
Damon Silvers
Mark Tresnowski
Steven Wallman (present in person for morning session, by telephone for afternoon session)
Ann Yerger

Staff of the Securities and Exchange Commission

Lori J. Schock, Director, Office of Investor Education and Advocacy
M. Owen Donley III, Chief Counsel, Office of Investor Education and Advocacy
David Fredrickson, Assistant General Counsel, Office of the General Counsel

OPENING2

Mr. Dear opened the meeting.  Chairman Walter and Commissioner Aguilar welcomed the committee.  Chairman Walter answered questions from the committee members.

SEPTEMBER 28, 2012 and OCTOBER 12, 2012 MEETING MINUTES APPROVAL

The committee approved the minutes without objection.

FUTURE COMMITTEE MEETING DATES APPROVAL

The committee approved future meeting dates without objection.  The approved dates are: (i) April 11, 2013, (ii) July 25, 2013, and (iii) October 10, 2013.

DISCUSSION OF COMMITTEE MEETINGS BETWEEN REGULARLY SCHEDULED MEETINGS

Mr. Fredrickson requested committee comments about the procedure used for the October 12, 2012 telephonic committee meeting.  In general, committee members were pleased with the procedure.  Committee members discussed the need to provide as much public transparency as possible, in particular (i) providing more advanced notice for meetings and (ii) providing written documents, to the extent possible, to the public in advance of meetings.  Committee members also discussed whether a formal mechanism needs to be established to address comment letters submitted by the public.  Mr. Fredrickson stated that committee members can review public comment letters and that any committee member can put a matter before the committee Chairman to be added to the meeting agenda.

MARKET STRUCTURE SUBCOMMITTEE REPORT

Mr. Wallman reported that the Market Structure Subcommittee has begun its work on systemic risk by meeting with The Depository Trust & Clearing Corporation (“DTCC”) on its study to shorten the settlement cycle from T+3 to T+2 or T+1.  The subcommittee plans to have a recommendation to shorten the settlement cycle prepared for the committee by the April 11, 2013 meeting.  The subcommittee is also focused on decimalization and high frequency trading.  Longer term, the subcommittee intends to focus on market structure issues such as DTCC’s immobilization and dematerialization policies.

INVESTOR EDUCATION SUBCOMMITTEE REPORT

Mr. Ganser reported that the Investor Education Subcommittee will focus its efforts on basic investing, including new retirees receiving lump sum payments who manage their own retirement accounts.  The subcommittee is also focused on crowdfunding because new retirees managing their own retirement accounts may participate in crowdfunding.  In addition, the subcommittee is interested in holding joint subcommittee meetings with the other subcommittees.

Mr. Brown asked the subcommittee to consider addressing Commission filing data tagging.  Mr. Kanzer asked the subcommittee to translate the recommendations of all four subcommittees and the committee into plain English.  Ms. Schock stated that OIEA is responsible for the Plain Writing Act and can assist the committee and subcommittees.

INVESTOR AS PURCHASER SUBCOMMITTEE REPORT

Ms. Roper reported that the Investor as Purchaser Subcommittee issued recommendations on general solicitation and is now focused on target date funds, investment adviser/broker-dealer fiduciary duties, and crowdfunding.  The subcommittee is drafting recommendations for target date funds to measure risk using risk exposure rather than asset allocation.  Members of the committee asked the subcommittee to consider target date fund risk investor education and whether investors would benefit from graphic cause and effect risk comparisons in evaluating target date funds.  The subcommittee is drafting recommendation language for the committee regarding a broker-dealer fiduciary standard.  The subcommittee is discussing how it will respond to the Commission’s upcoming crowdfunding rule proposal.

INVESTOR AS OWNER SUBCOMMITTEE REPORT

Ms. Sheehan reported that the Investor as Owner Subcommittee wants to accelerate the Dodd-Frank Act executive compensation rulemaking by the Commission.  The subcommittee is also discussing proxy issues, especially the universal proxy card concept and voter instruction form changes to encourage retail shareholder participation in voting.  The committee discussed the need for encouraging issuer engagement on executive compensation rulemaking.

Mr. Brown asked the subcommittee to consider addressing Commission filing data tagging so the data contained in the filings can be retrieved and analyzed.  He also asked the subcommittee to discuss disclosure of political contributions by publicly traded companies.

LUNCH BREAK [NON-PUBLIC SUBCOMMITTEE SESSIONS]

INVESTOR AS OWNER SUBCOMMITTEE REPORT

Ms. Sheehan reported that the Investor as Owner Subcommittee is collecting information on the universal proxy card for its next subcommittee meeting and may submit a recommendation to the committee.  In addition, the subcommittee discussed changes to shareholder voting instruction forms so that voters better understand the proposals they are being asked to vote on.  The Commission staff will brief the subcommittee on general solicitation rules so that the subcommittee can consider recommendations.  The subcommittee may convene a group of issuers, shareholders, and other interested parties to comment on Commission rulemaking on Chief Executive Officer and Named Executive Officer pay ratios.  The subcommittee plans to discuss data tagging and political contributions at future meetings.  Finally, the subcommittee plans to invite Commission staff to a subcommittee meeting to discuss a concept release on beneficial ownership reporting by shareholders.  Ms. Sheehan will e-mail the subcommittee to arrange monthly subcommittee meetings and will inform the committee.

INVESTOR AS PURCHASER SUBCOMMITTEE REPORT

Ms. Roper reported that the Investor as Purchaser Subcommittee met jointly with the Investor Education Subcommittee and discussed crowdfunding investor risks and the need for investor education.  The subcommittee decided to hold monthly conference calls the first or second Monday of every month at 1:00 p.m. EST.  Ms. Roper will issue a notice to the committee when she determines the meeting dates.

INVESTOR EDUCATION SUBCOMMITTEE REPORT

Mr. Ganser reported that the Investor Education Subcommittee will review Securities Act Section 4A as amended by the JOBS Act for investor education opportunities.  In addition, the subcommittee will continue to meet with the Investor as Purchaser Subcommittee and will establish a regular monthly meeting.

MARKET STRUCTURE SUBCOMMITTEE REPORT

Ms. Bradbury reported that the Market Structure Subcommittee met with the staff of the Division of Trading and Markets.  They discussed the February 5, 2013 Decimalization Roundtable and DTCC’s study to shorten the settlement cycle.  The subcommittee may focus on issues related to decimalization before the April 11, 2013 committee meeting but is unlikely to develop a recommendation by that time.  The subcommittee may draft a recommendation on shortening the settlement cycle before the April 11 meeting.  The subcommittee also discussed analytical capabilities with Gregg Berman, the new head of the Office of Analytics and Research.

CLOSING

Mr. Dear closed the meeting.


1 A Webcast of the meeting is available at http://www.sec.gov/news/otherwebcasts/2013/iac011813.shtml.

2 For purposes of these minutes, descriptions of discussions have been grouped and listed seriatim, even though the discussions of different items overlapped on occasion.

 

http://www.sec.gov/spotlight/investor-advisory-committee-2012/iac011813-minutes.htm


Modified: 04/15/2013