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U.S. Securities and Exchange Commission

Securities and Exchange Commission Investor Advisory Committee

Minutes of July 25, 2013 Meeting1

The Investor Advisory Committee convened its July 25, 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 3:15 p.m. and was open to the public, except for non-public subcommittee meetings. Those attending were:

Commissioners of the Securities and Exchange Commission

Chair Mary Jo White (morning session only)
Commissioner Elisse Walter (morning session only)
Commissioner Daniel Gallagher (morning session only)

Advisory Committee Members

Darcy Bradbury
Roger Ganser
Craig Goettsch
Stephen Holmes
Adam Kanzer
Roy Katzovicz
Barbara Roper
Kurt Schacht (afternoon session only)
Alan Schnitzer
Jean Setzfand (by phone)
Anne Sheehan
Damon Silvers (afternoon session only)
Steven Wallman
Ann Yerger

Staff of the Securities and Exchange Commission

Lori J. Schock, Office of Investor Education and Advocacy
M. Owen Donley III, Office of Investor Education and Advocacy

OPENING2

Mr. Goettsch opened the meeting. Chair White and Commissioners Walter and Gallagher welcomed the Committee. Chair White delivered remarks to the Committee focused on the Committee’s efforts on general solicitation, target date funds, universal proxy ballots, and data tagging.

April 11, 2013 MEETING MINUTES APPROVAL3

The Committee approved the minutes without objection.

CONSIDERATION OF RECOMMENDATIONS OF THE INVESTOR AS OWNER SUBCOMMITTEE REGARDING DATA TAGGING4

Ms. Sheehan, Chair of the Investor as Owner Subcommittee, presented three recommendations from the Investor as Owner Subcommittee on data tagging and invited comments and questions on each.

Recommendation 1

That the Securities and Exchange Commission (“SEC”) adopt a “Culture of Smart Disclosure” that promotes the collection, standardization, and retrieval of data filed with the SEC using machine-readable data tagging formats. To implement this Culture of Smart Disclosure, the Commission should consider:

  • Issuing a public statement acknowledging the approach;
     
  • Requiring each operating division within the SEC to integrate data tagging into all future rulemaking and rule revision efforts that involve the collection of data by the SEC; and
     
  • Providing adequate resources to implement this Culture, particularly through an increase in the resources of the SEC’s Office of Interactive Data.

Recommendation 2

That the SEC should take steps designed to reduce the costs of providing tagged data, particularly for smaller issuers and investors.

Recommendation 3

That the SEC gives priority to the revision of certain existing forms to provide for the tagging of data that would provide increased transparency with respect to corporate governance. Such revisions should include:

  • The portions of the proxy statement on Schedule 14A that relate to executive compensation (including the compensation discussion and analysis and the compensation paid to directors) and matters voted upon by shareholders (including the election of directors). Data tagging should be done in a manner designed to facilitate automated matching of voting items in a proxy filing to voting results disclosed by mutual funds in Form N-PX and by issuers in current reports on Form 8-K;
     
  • Form N-PX filed by mutual funds. The forms that include the registrant’s proxy voting record for the most recent 12 month period; and
     
  • Voting results filed with the Form 8-K. Item 5.07 of Form 8-K requires issuers to report voting results for any matter submitted to shareholders through the solicitation of proxies (including the election of directors).

The Committee approved the recommendations without further amendments.

DISCUSSION OF POTENTIAL RECOMMENDATIONS OF THE INVESTOR AS PURCHASER SUBCOMMITTEE REGARDING FIDUCIARY DUTIES FOR BROKER-DEALERS

Ms. Roper, Chair of the Investor as Purchaser Subcommittee, discussed the Commission’s request for data and information relating to the benefits and costs that could result from various alternative approaches regarding the standards of conduct and other obligations of broker-dealers and investment advisers who give personalized investment advice to retail investors.5 She solicited comments from the Committee on whether the Investor as Purchaser Subcommittee should recommend that the Commission adopt a fiduciary duty for broker-dealers and, if so, what should comprise the key elements of the fiduciary duty.

LUNCH BREAK [NON-PUBLIC SUBCOMMITTEE SESSIONS]

CONSIDERATION OF RECOMMENDATION OF THE INVESTOR AS OWNER SUBCOMMITTEE REGARDING UNIVERSAL PROXY BALLOTS6

Mr. Katzovicz, a member of the Investor as Owner Subcommittee, presented a recommendation from the Investor as Owner Subcommittee on universal proxy ballots and invited comments and questions.

Universal Ballot Recommendation

The Commission should explore relaxing the “bona fide nominee” rule embodied in Rule 14a-4(d)(1) promulgated in 1966 under Section 14 of the Securities Exchange Act of 1934 to provide proxy contestants with the option (but not the obligation) to use Universal Ballots in connection with short slate director nominations (in other words, where the candidates nominated by shareholders would, if elected, constitute a minority of the board of directors). In connection with that process, specific inquiry should be made as to whether all or only a portion of duly nominated candidates must or may appear on Universal Ballots.

The Committee approved the recommendation without further amendments.

MARKET STRUCTURE SUBCOMMITTEE REPORT

Mr. Wallman reported that the Market Structure Subcommittee discussed two major issues. First, the subcommittee discussed shortening the settlement cycle and intends to have a recommendation at the next Committee meeting. Second, the subcommittee discussed decimalization, specifically increasing the minimum tick size above a penny. The subcommittee intends to prepare a recommendation on tick size.

INVESTOR EDUCATION SUBCOMMITTEE REPORT

Mr. Ganser reported that the Investor Education Subcommittee is focused on public service announcements as a new communication method for the Commission to inform and protect individual investors. The subcommittee is collecting data to support the use of public service announcements and is also exploring funding the public service announcements. The subcommittee intends to prepare a recommendation on the use of public service announcements in the next 3 to 6 months.

INVESTOR AS OWNER SUBCOMMITTEE REPORT

Ms. Sheehan reported that the Investor as Owner Subcommittee had a briefing session by two proxy advisory firms. The subcommittee also discussed voter instruction forms. The subcommittee discussed with the Division of Corporation Finance shareholder proposals and Rule 14a-8 of the Securities Exchange Act of 1934. The subcommittee met with the Division of Economic Research and Analysis in order to better understand rulemaking economic analysis. The subcommittee also discussed with Commission staff continued progress on the Dodd-Frank Wall Street Reform and Consumer Protection Act rules and JOBS Act rules. The subcommittee prepared a memo for Committee members on shareholder proposals on political contributions.

INVESTOR AS PURCHASER SUBCOMMITTEE REPORT

Ms. Roper reported that the Investor as Purchaser Subcommittee intends to prepare a recommendation on broker-dealer fiduciary duty by the next Committee meeting. The subcommittee is also discussing whether it wants to take additional action, such as a recommendation, in regard to the Commission’s proposed general solicitation rules.7 The subcommittee is also discussing how securities regulators are funded and how regulation is delegated among regulators.

CLOSING

Mr. Goettsch closed the meeting.


1 A Webcast of the meeting is available at http://www.sec.gov/news/otherwebcasts/2013/iac072513.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.

3 The April 11, 2013, meeting minutes are available at http://www.sec.gov/spotlight/investor-advisory-committee-2012/iac041113-minutes.htm.

4 The Recommendations of the Investor as Owner Subcommittee on Data Tagging are available here.

5 Request for Data and Other Information: Duties of Brokers, Dealers, and Investment Advisers, Exchange Act Release No. 69013 (Mar. 1, 2013), available at http://www.sec.gov/rules/other/2013/34-69013.pdf.

6 The Recommendation of the Investor as Owner Subcommittee on Universal Proxy Ballots is available here.

7 Amendments to Regulation D, Form D and Rule 156, Securities Act Release No. 9416, Exchange Act Release No. 69960 (Jul. 10, 2013), available at http://www.sec.gov/rules/proposed/2013/33-9416.pdf.

 

http://www.sec.gov/spotlight/investor-advisory-committee-2012/iac072513-minutes.htm


Modified: 12/26/2013