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Remarks at the SEC’s Investor Advisory Committee Meeting

March 8, 2018

I would like to join Chairman Clayton in welcoming the members of our Investor Advisory Committee this morning, and in particular, in welcoming two new members of the Committee, Jennifer Marietta-Westberg and Heidi Stam.

I’m pleased to see that today’s first panel will explore new ways in which the Commission might fight retail investor fraud. Protecting retail investors is at the heart of the Commission’s mission. But more importantly, as William O. Douglas famously championed, “We are first and last the investors’ advocate.”[1]

Over the last three decades, our securities markets have become increasingly influenced by institutions—whether from hedge funds, pension funds, private equity funds, mutual funds, insurance companies, or bank trust departments. However, this shift toward institutionalization does not mean that retail investors are no longer an important component of our securities markets. In 2016, U.S. households held an estimated $38.4 trillion in total liquid assets, more than 60% of which was in equities, stock and bond mutual funds, and municipal bonds.[2]

In today’s market, who is a retail investor? Individuals and households may not directly purchase a company’s securities, but instead decide to invest in retirement plans, funds, or management services through brokerage firms.

What former SEC Chairman Jerome Frank said in 1937 is equally true today:

“Now, you can’t have continued investment without profits, and you certainly can’t have investment without the confidence of investors—without the confidence of the great middle class. And that’s where, as I see it, the SEC comes in. While, to be sure, there are some great self-sufficient industries, not requiring new investors, yet it is undoubtedly true, in the main, that the flow of funds from investors to business and back to investors and to labor and to farmers, in the form of profits and wages, is the life-line of American democracy.”[3]

After lunch, the Committee will discuss financial support for law school investor clinics, dual-class share structures, and how to prevent the financial exploitation of seniors.

The discussion regarding law school clinics is a continuation of the discussion this Committee held at the October 12, 2017 meeting. It’s clear to me that these student advocates are making a real difference, and helping retail investors who would not have access to legal services otherwise. I support the effort to help these law school clinics continue to help retail investors around the country.

Next, the Committee will hold a discussion about dual-class share structures. I look forward to hearing the Committee’s discussion and possible recommendation, and would urge the Committee to continue looking at this issue.

Along the same lines as protecting retail investors generally, in an afternoon panel, the IAC will discuss ways to prevent financial exploitation of our senior citizens.

As always, I very much appreciate the hard work and dedication that this Committee brings to the issues that matter to our nations investors.

[1] Chairman William O. Douglas, Address at the Dinner of the Association of Stock Exchange Firms (May 20, 1938), available at

[2] See Securities Industry and Financial Markets Association, 2017 Fact Book, at 4 (2017), available at; see also Financial Accounts of the United States: Flow of Funds, Balance Sheets and Integrated Macroeconomic Accounts, Board of Governors of the Federal Reserve System, at 14 (Third Quarter 2017), available at

[3] Frank Heads SEC; Vote For Him 3 to 2, N. Y. Times (May 19, 1939) (quoting SEC Chairman Jerome N. Frank).

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