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Remarks to the SEC Investor Advisory Committee

Chairman Jay Clayton

Oct. 12, 2017

Thank you, Anne (Sheehan), and good morning.  I would also like to extend a warm welcome to Allison [Bennington] and Mina [Nguyen], who were recently appointed to the Committee.   

FAST Act Proposals

Yesterday, the Commission took an important step to make our rules less burdensome while maintaining investor protection.  The first item on the Commission’s rulemaking agenda was a proposal based on the recommendations in the staff’s Report on Modernization and Simplification of Regulation S-K, as required by Section 72003 of the Fixing America’s Surface Transportation Act, or the FAST Act. 

Since the adoption of the FAST Act, Commission staff has consulted with the Committee about the effectiveness of disclosures.  The Committee has made several recommendations with respect to specific disclosure issues and the manner of delivery.  I also want to extend my appreciation to members of the Investor as Owner Subcommittee.  They submitted a comment letter on the staff’s FAST Act report which reflected an area where we share common ground.  In particular, they advocated for “more useful disclosures, delivered in a more cost effective manner.”

The amendments that we proposed yesterday are designed to achieve this objective.  The proposals are intended to modernize and simplify disclosure requirements in Regulation S-K in a manner that reduces the costs and burdens on registrants while continuing to provide material information to investors.  The amendments are also intended to improve the readability and navigability of disclosure documents and discourage repetition and disclosure of immaterial information.  I look forward to the Committee’s feedback on the FAST Act proposals and continued engagement on these issues.

Blockchain Technology

Turning to today’s agenda, the first panel will focus on blockchain technology and its implications for securities markets.  Financial technology and innovation are essential to robust and competitive markets.  We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected.  That was a key driver for the report on DAO tokens that the Commission issued in July.  Providing greater clarity concerning the application of the federal securities laws to the use of distributed ledger or blockchain technology to raise capital, as the report does, is consistent with this goal and the Commission’s mission.  We continue to study the effects of distributed ledger technologies, such as blockchain, and I’m certain that we will benefit from today’s discussion. 

We also strive to keep investors informed of technological developments.  To that end, our Office of Investor Education and Advocacy recently issued a bulletin to provide additional information about technologies such as blockchain.  The bulletin also warns investors that new technologies can provide new avenues for bad actors to engage in old frauds.

Retail Investors

Later this afternoon, two panels will focus on retail investors.  The first panel will provide an overview of law school advocacy efforts on behalf of retail investors, and the second panel will discuss electronic delivery of information to retail investors.  I applaud aspiring lawyers who dedicate their time and efforts to serve as champions for retail investors.  And, I encourage all market participants who have ideas or recommendations for the Commission to present them through the lens of what is in the long-term interest of Mr. and Ms. 401(k).  It is crucial that these investors receive the information that they need to make informed voting and investment decisions, and we should keep them front and center in our efforts to improve our disclosure system.

Thank you again for your service on this Committee.  I hope you have a productive day.

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