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Opening Remarks to the Investor Advisory Committee

Chair Mary Jo White

July 14, 2016

Good morning and welcome.  The Investor Advisory Committee is a very important voice in informing the Commission’s work, and I am pleased to see new and returning members gathered here today or on the phone with another agenda of important issues to discuss.  I would like to extend a special welcome and congratulations to our newest members, Professor John Coates who is participating by telephone today, as well as Nancy LeaMond, and Elisse Walter, neither of whom could join us today because of commitments that pre-dated their appointment to the Committee.  John, Elisse and Nancy will all add tremendous value to the Committee’s work in the coming months.

John Coates is the John F. Cogan Jr. Professor of Law and Economics at Harvard Law School, and Research Director of the Center on the Legal Profession.  Nancy LeaMond is the Executive Vice President and Chief Advocacy and Engagement Officer for AARP.  And our third new member is very familiar and revered around here, Elisse Walter, my predecessor and former Chair of the SEC.  I would also like to thank all of our returning members and to especially thank Kurt Schacht and Anne Sheehan, the Chair and Vice Chair, for their leadership.  We are grateful to all of you for your willingness to serve on the Committee and support its important work on behalf of investors.

Ordinarily, I try to focus my opening remarks at your meetings on the Commission’s actions in areas of interest to you that have occurred since your last meeting.  As it happens, this Committee met in April and then again telephonically in June, so you are pretty up to date.  You have had a busy spring and summer so far as have we, including (for the Commission) as recently as yesterday when we voted to issue two rule proposals and a related request for comment and two final sets of rules.  The final rules are Title VII reporting requirements for security-based swaps and amendments to our rules of practice for administrative proceedings.

The proposals focus on certain disclosures of broker-dealers and companies.  As part of our equity market structure initiative, we issued an important proposal for increasing order routing transparency for institutional and retail investors, which should assist customers in assessing and comparing the services of their broker-dealers and promote competition among broker-dealers.  We also issued a proposal and request for comment on certain of our disclosure requirements that may have become redundant, outdated, or superseded in light of other or subsequent Commission disclosure requirements, accounting principles, or changes in technology.  This proposal and the related request for comment is the latest product of the staff’s work on disclosure effectiveness and would also implement one of our FAST Act mandates.  It is intended to update and simplify certain of our disclosure requirements while maintaining the total mix of information available to investors for their investment and voting decisions.

For both of these proposals, we are seeking robust comments from investors and others to inform our next steps.  Given the expertise of the members of this committee, we especially want you to weigh in.  We want to know what works and what does not, so that investors have what they need to make informed decisions.  The staff would also be happy to meet with the Committee on any of these proposals or final rules prior to your next meeting.

Let me move from that brief update to your two main agenda items for today:  sustainability reporting and investment company reporting modernization.

Sustainability Reporting

As I stated a couple of weeks ago in a speech before the International Corporate Governance Network, sustainability reporting is a topic of great importance, interest, and complexity, and one that has our attention.[1]  At the most basic level, of course, sustainability issues must be addressed in Commission disclosures if they are material to a company’s financial condition or results of operations.  Sustainability issues can comprise a wide range of topics – from climate change to resource scarcity to corporate social responsibility – and determining materiality of such items can present unique issues.

The complexity notwithstanding, I am encouraged by the significant progress that has been made on voluntary disclosures about these issues – for example, 90 percent of the world’s 250 largest companies voluntarily reported on sustainability standards last year.  Initiatives like those undertaken by the GRI, SASB, and IIRC – have supported these efforts and continue to mature sustainability reporting.  These organizations are represented by their very impressive and knowledgeable senior leaders on this morning’s panel and I really am looking forward to hearing from each of them.

As you know, a number of important and persistent topics remain despite the progress that has been made in sustainability reporting, and I anticipate you will be grappling with at least some of them today.  One is materiality – as I remarked recently, assessing whether disclosures are required in a particular context can be challenging, especially given the longer term implications of many sustainability issues.  Another is the role of “integrated reporting” of financial and non-financial information.  Yet another is the role of shareholder advocacy and proposals, where again there has been increased activity.

These are all important issues, and I look forward to receiving input from the Committee and other constituents on where you see sustainability reporting appropriately fitting into the SEC’s role and rules.  That is why, as it does on many other issues, our recent concept release on Regulation S-K asks whether and where investors would benefit from additional or enhanced disclosure on sustainability issues.  This topic, among many other important ones, was taken up in this Committee’s preliminary comment letter sent in June on the S-K concept release, which was very thoughtful and welcome.  I look forward to your further input, and will be especially interested to hear from your panelists today on the areas on which they agree and areas where there may be differences of opinions as to what is needed.

Investment Company Reporting Modernization

Your other major agenda item for today—the modernization of the reporting framework for mutual funds and other investment companies is also very important.  As you know, last year the Commission proposed significant enhancements to the existing framework to improve the quality of information available to investors in mutual funds and other registered investment companies, while also broadening the Commission’s ability to use and collect data from investment companies and advisers.

While I understand that your discussion today will focus on some important discrete aspects of this proposal, I want to emphasize as well the breadth of the Commission’s proposed action.  The proposal, if adopted, would vastly improve the type and format of the information that funds provide to the Commission and to investors.  Investors would have better quality and greater access to information about their fund investments and investment advisers, and the SEC would have more and better information to monitor risks in the asset management industry.

One element of the proposal that has attracted considerable attention—and I believe the issue the Committee is primarily focused on today— is the use of paper and websites to make certain of the disclosures required of funds.  There are many considerations involved in considering the manner and form of delivery for any disclosure, which we have made a major focus of our disclosure effectiveness reviews in both Corporation Finance and Investment Management.  The discussion of these issues, as they are raised in this proposal, has been considerable, and I again look forward to your discussion today about how to most effectively and efficiently get investors the information they need.


Let me close by reiterating how fortunate we are to have such a distinguished, diverse group of experts on this Committee.  I thank you in advance for your hard work and for your continued commitment to investors.


[1] See Mary Jo White, Chair, U.S. Securities and Exchange Committee, Focusing the Lens of Disclosure to Set the Path Forward on Board Diversity, Non-GAAP, and Sustainability (Jun. 27, 2016) available at, and Business and Financial Disclosure Required by Regulation S-K, Release No. 33-10064 (Apr. 13, 2016) (“Regulation S-K Concept Release”), available at

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