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Remarks at Meeting of the Investor Advisory Committee

June 22, 2017

Thank you, Anne (Sheehan), and good morning. 

Let me begin by thanking all of you for your service on this Committee.  I know you all have very busy schedules.  I am grateful that you have taken the time to contribute your knowledge and expertise on behalf of investors and our markets. 

I had an opportunity to meet with the Executive Committee yesterday to discuss some of the important work you have been doing, and it is good to see all of you this morning.  I look forward to working with you.

Before we move to the business of the day, I want to recognize the contributions of Kurt Schacht to this Committee.  I want to thank Kurt for his years of service to this Committee, the Commission, and America’s investors.  Kurt, your contributions are valuable and lasting.  Thank you.

Turning to today’s business, I have had the chance to review the recommendations of this Committee.  I appreciate the thoughtfulness that went into them.  I will keep those recommendations in mind as we prioritize the Commission’s agenda for the coming months and years.  I am certain we will benefit from your suggestions as we move forward, and I look forward to your continued engagement as we address important issues during my tenure as Chairman.

For example, I share your interests in promoting transparency for retail investors in our fixed income markets.  I am pleased that we have been able to make progress in this area.  In November of last year, the Commission approved rules by FINRA and MSRB that will require disclosure to retail customers of mark-ups and mark-downs for certain transactions in fixed income markets.  I believe this is an important step toward creating more transparent bond markets, and that it will provide substantial benefits to retail investors.  I understand there are still discussions to be had around pre-trade price transparency.  I look forward to engaging on that and other issues related to our fixed income markets. 

I also share your interests that our Main Street investors – particularly older investors – have the tools they need to make informed investment decisions.  My office recently had the chance to follow up with the staff on this topic, and I was pleased to hear that they have a number of efforts underway to simplify and enhance the tools available to help investors conduct background searches on their investment professionals and make informed decisions.

I wanted to take this opportunity to emphasize that detecting and punishing fraud – particularly against retail investors – is a high priority for me.  As I have said in the past, there is simply no room for bad actors in our capital markets.  Fraud hurts innocent investors and undermines confidence in our markets, and we will continue to vigorously pursue those that seek to do harm.  I am also working with the staff on initiatives to educate investors on ways in which they can prevent themselves from becoming victims of fraud.  You can expect to hear more from me, our Investor Advocate Rick Fleming, our Co-Director of Enforcement Stephanie Avakian, and others at the Commission on this in the coming weeks and months.

As I conclude, I also want to thank you for highlighting two timely and important issues during your meeting today.  Your afternoon panel will review potential impacts of the Financial CHOICE Act.  A number of provisions are relevant to the Commission’s activities, and I look forward to hearing the views of the panelists.  Your morning panel will include a discussion of capital formation and the decline in IPO activity, particularly among smaller companies.  As you may have heard, I have a deep interest in this topic. 

The substantial decline in the number of U.S. IPOs and publicly listed companies in recent years is of great concern to me.  Some companies have shifted capital raising activities to the private markets, where many Main Street Americans have limited access.  High-quality companies may choose to go public at a later stage, after much of their early growth has already been achieved.  Other companies may choose to stay private.  This ultimately results in fewer opportunities for Main Street Americans to share in our economy’s growth, at a time when we are asking them to do more on their own to save and invest for their future and their children’s futures. 

Under my direction and the direction of Bill Hinman, our Director of the Division of Corporation Finance, the staff is actively exploring ways in which we can improve the attractiveness of listing on our public markets, while maintaining important investor protections.  I look forward to hearing the views of the panelists – not only on the causes of the decline in IPO activity and the substantial decline in the number of public companies, but also on potential ways to reverse those trends.   I expect that the Committee will have valuable recommendations on this topic.     

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

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