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Remarks at Investor Advisory Committee Meeting

March 11, 2021

Thank you Jennifer [Marietta-Westberg] and the rest of the Committee for holding today’s meeting. Welcome to Brian Hellmer and Leslie Van Buskirk. The last several months have seen unprecedented national attention on our capital markets thanks to the meme stock trading events. Even as we look critically at what happened, a moment like this, when we have a broad and interested audience, is also a wonderful opportunity—an opportunity to tell the real story of wealth creation in the capital markets and to invite more Americans to take part in that story. It is not a story of getting rich over night, but rather a story of building America through investments that enable companies to grow, thrive, and enrich their shareholders, who, in turn, can use the profits to educate their children, buy homes, and build a family nest egg. This story will be more powerful when more Americans play a role as investors contributing to, and entrepreneurs drawing from, the capital markets.

I am encouraged to see that this Committee is thinking about ways to make the capital markets work better for investors and play a central role in every community and family across our nation. The draft recommendation on minority and underserved inclusion offers us some ideas on how to expand investment opportunities and empower investors to take advantage of those opportunities. These ideas include reducing minimum account balances and initial investment requirements and improving disclosure effectiveness. To supplement these ideas, I would welcome your input on the importance of technology as a tool for expanding the investor base. Rather than decrying new technologies designed to make investing fun and easy, how can we use them to cultivate and educate a whole new generation of investors? Many of our rules are written with a paper-based world in mind and ignore the reality that broad swaths of society are increasingly comfortable with digital delivery and other modes of communication, especially in light of a year’s worth of experience living in a paperless pandemic. I hope this Committee will advise us on how investors use technology and what we can do to facilitate financial services firms’ ability to communicate effectively with their clients.

A knee-jerk reaction to events like those surrounding the meme stocks or problems associated with two of today’s discussion topics—self-directed IRAs and SPACs—is to try to dissuade retail investors from participating at all. As we have seen with the wealth-based accredited investor thresholds, telling investors they cannot make decisions for themselves only supports their suspicions that the capital markets are for the wealthy. A better approach is to keep open different avenues for investors to access the markets, but ensure that disclosures are good, warn investors of the risks associated with investing, and urge them to ask questions and proceed with caution. Overly prescriptive regulations to protect self-directed IRA investors could serve to close this option to them altogether. Likewise, well-intentioned increased regulatory obligations around SPACs could make them less cost-effective.

SPACs are clearly having a moment as they outpace traditional IPOs in the number and size of deals so far in 2021. Looking past the hype—and there is a lot of that as our staff highlighted in an investor bulletin yesterday[1]—I am encouraged that SPACs may be vehicles through which retail investors can gain early exposure to high-growth companies that otherwise would not be available to them. We should welcome the addition of startup public companies that historically would have experienced their growth stage in the private markets, where retail investors are not permitted to participate. Of course, many startups fail, and assessing opportunities and risks associated with SPACs can be particularly difficult given the two-staged SPAC process, which involves both an IPO and a subsequent business combination transaction. We should ensure SPACs are providing sufficient disclosures to enable informed investment decision-making at each stage. A question for the panel is whether the disclosure guidance issued by the Division of Corporation Finance in December 2020 is helpful and sufficient.[2]

Finally, I appreciate the Committee’s work on credit rating agencies. The draft recommendation suggests that the SEC’s Office of Credit Ratings should publicly tie examination findings to specific nationally recognized statistical rating organizations (NRSROs). This recommendation is thought-provoking. I appreciate specific ideas designed to enhance transparency and accountability of NRSROs, but I hope your discussion of the recommendation will consider whether the benefits of such a change would be outweighed by the chilling effect on the communication and flow of information between our staff and the NRSROs. Also would such a change disproportionately affect smaller NRSROs in a field where competition is sparse to begin with?

Thank you. I am looking forward to today’s discussions.

[1]SEC’s Office of Investor Education, Celebrity Involvement with SPACs – Investor Alert (Mar. 10, 2021), available at

[2] SEC’s Division of Corporation Finance, CF Disclosure Guidance Topic No. 11: Special Purpose Acquisition Companies (Dec. 22, 2020), available at

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