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Remarks at Meeting of SEC Investor Advisory Committee

Dec. 3, 2020

Thank you, Paul [Mahoney]. Let me start by welcoming the new committee members[1] and congratulating the Committee’s new officers. Thank you in advance to both groups for the significant time commitment that you are taking on. I look forward to seeing the work this Committee will do in the coming months under the leadership of Jennifer [Marietta-Westberg], Heidi [Stam], Ted [Daniels], and JW [Verret]. And thank you, Jerry [Solomon] for your valuable service on the Committee.

Today’s meeting promises to be informative. Good corporate disclosure is necessary for investors to make informed investment decisions and is a key feature of our first-in-class capital markets. Producing high quality disclosure during the pandemic is a challenging task. Providing the bread-and-butter disclosure of a public company’s financial condition, results of operations, and liquidity and capital resources is made difficult when large swaths of your workforce are under stay-at-home orders and external auditors are restricted in their ability to perform on-site work. Moreover, providing forward-looking information on future operating conditions and resource needs becomes an intractable task given the remarkable uncertainty in our daily lives.

Not surprisingly, the disclosures to date have varied in the extent to which they discuss the effect of COVID on their operations, financial condition, and expectations of future performance. Our flexible disclosure regime elicits tailored disclosures that allow investors to understand the business through the eyes of management. Management teams will naturally assess the effect and risks of the pandemic to their businesses differently than their competitors, and our markets are stronger when investors can see those differences and allocate their capital according to their own beliefs as to what the future holds. A few questions I have are: What are some of the best disclosure practices observed? Are certain industries providing higher quality disclosures than others? How helpful was the disclosure guidance offered by the Chairman and the staff? Is there disclosure that investors need, but are not receiving?

The afternoon’s panel discussion regarding COVID-19 implications for the next proxy season is also intriguing. With one proxy season under our belts during this time of COVID-19, I hope that some of the quirks experienced at virtual shareholder meetings last time around will not be repeated. What were the experiences with virtual shareholder meetings last year and have lessons been learned? Was shareholder participation impeded? Are there lingering concerns with printing and mailing proxy materials? Is there anything the SEC needs to be thinking about in terms of relief or guidance?

I look forward to the robust discussion on these and other issues today. Thank you.

[1] Jamila Abston, Cambria Allen-Ratzlaff, Brian Hellmer, Sandra Peters, Paul Sommerstad, Alice Stinebaugh, Leslie Van Buskirk, and Joanne Yoo.

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