Remarks at the SEC’s Investor Advisory Committee Meeting
June 14, 2018
Good morning and welcome to today’s meeting of the Investor Advisory Committee. I want to take this opportunity to thank each of you for taking the time out of your extremely busy schedules to come here today to share your best thoughts with us. I also want to thank Georgia State University, and, in particular, the College of Law, for providing us with such wonderful surroundings.
This morning, we are holding the first Investor Advisory Committee meeting in a location outside of Washington, D.C. I would like to thank our staff for organizing this meeting in Atlanta, and the Chairman, for deciding to hold the event outside of the Washington beltway.
Today’s agenda, in large part, focuses on a recently proposed Commission rule about the minimum standards of conduct for brokers when acting for retail investors and a new required disclosure document to be provided to prospective clients at the beginning of the client relationship.
The minimum standard of conduct for investment professionals, generally, is something that the Commission, the public, the financial industry, the courts, the media, and even this Committee have been focusing on for years. I might even say that it is one of the most closely watched areas of financial protection since I started at the Commission. And, it is a topic of vital importance to every investor, large or small. So in my opinion, there’s no better meeting topic to take off-site and hold here in Atlanta.
Regulation Best Interest purports to propose a minimum standard that brokers may not put their own interests before the investor’s. But I’m not sure it does, which is why I’m interested in hearing what the Committee and its invited guests have to say.
Can a broker comply with the rule if its interests are equal to a customer’s interests? Is it possible that brokers and investors can have the same “best” interests at the same time? How would that work? What should the standard be? Specifically, how does this proposed standard eliminate investor confusion regarding financial professionals? Why can’t brokers put their clients first and foremost?
Later this morning, the Committee will address proposed Form CRS, or Customer Relationship Summary. Form CRS is a disclosure document intended to inform potential customers about the relationship they are about to commence with their investment professional.
We have some great panelists here today, and I am excited to hear from them. Will this new document properly inform prospective clients? Will investors be able to make a more informed decision about their investment professional based on the disclosures? Or will it be set aside or thrown in the trash?
I’ve learned a lot already about disclosure from this very Committee. What more can be done in the way of disclosure? And when is disclosure not enough? What would make the form more useful? I hope to learn more on those topics today.
After lunch, the Committee will switch gears and discuss disclosure enhancements for municipal and corporate bonds. This is an important area and I hope the Committee can use what it learns about disclosure in other contexts and apply it to potential recommendations in this area. I look forward to today’s discussion.
 I have included several other questions and requests for comment in my Statement on the Proposals Relating to Regulation Best Interest, Form CRS, Restrictions on the Use of Certain Names or Titles, and Commission Interpretation Regarding the Standard of Conduct for Investment Advisers, which is available on the Commission’s website at https://www.sec.gov/news/public-statement/stein-statement-open-meeting-041818.