Securities and Exchange Commission Investor Advisory Committee

Minutes of the Meeting on March 9, 2017

The Investor Advisory Committee (IAC) met on March 9, 2017, in a public meeting at the Securities and Exchange Commission's headquarters in Washington, D.C. The meeting convened at 9:34 a.m. and was broadcast live by webcast

The following persons participated in the meeting:

Commissioners of the Securities and Exchange Commission

Acting Chairman Michael Piwowar
Commissioner Kara Stein

Advisory Committee Members[1]

Kurt Schacht, Chairman
Anne Sheehan, Vice Chairman
John Coates
Lisa M. Fairfax
Rick Fleming
Matthew Furman (by phone)
Stephen Holmes
Hester Peirce
Barbara Roper
Anne Simpson
Damon Silvers
Jerome Solomon
Elisse Walter
Susan Wyderko


Opening Remarks

Chairman Kurt Schacht opened the meeting and welcomed Jerome Solomon as the Committee's newest member, as did Acting Chairman Piwowar and Commissioner Stein.  In his opening remarks, Acting Chairman Piwowar offered a summary of recent Commission rulemaking.  In her opening remarks, Commissioner Stein emphasized the SEC's role as investor advocate.  In response to questions from Mr. Silvers, Acting Chairman Piwowar briefly described the budget process that was then underway.

Approval of the Minutes of the Meeting on December 8, 2016

Ms. Sheehan proposed and Mr. Holmes seconded a motion to approve the minutes of the Committee's public meeting on December 8, 2016.  The motion was passed unanimously.

Discussion Regarding SEC Investor Research Initiatives, FINRA 2016 Financial Capability Study, and Academic Research on Financial Literacy

Mr. Fleming introduced the topic and the three panelists, who spoke in the following order:

  • Gary Mottola, Research Director, FINRA Investor Education Foundation
  • Brian Scholl, Principal Economic Advisor and Senior Economist, Office of the Investor Advocate, SEC
  • Annamaria Lusardi, Academic Director, Global Financial Literacy Excellence Center (GFLEC), and Denit Trust Distinguished Scholar & Professor of Economics and Accountancy, The George Washington University School of Business                       

Mr. Mottola described high-level findings from the most recent National Financial Capabilities Study.  Mr. Scholl described the investor research being conducted in the SEC Office of the Investor Advocate.  Professor Lusardi pointed to data showing that basic financial literacy among the general public is low and only slightly higher among investors.  A discussion among speakers and Committee members followed. 

Discussion Regarding Unequal Voting Rights of Common Stock

Mr. Schacht framed the issue and introduced the panelists, who spoke in the following order:

  • David Berger, Partner, Wilson Sonsini Goodrich & Rosati
  • Ken Bertsch, Executive Director, Council of Institutional Investors
  • Jill Fisch, Perry Golkin Professor of Law, University of Pennsylvania Law School
  • Rakhi Kumar, Managing Director, Head of ESG Investments and Asset Stewardship, State Street Global Advisors

Mr. Berger spoke of what he termed a governance misalignment, which he argued at least partially explains the rise of multiclass and non-voting shares.  Mr. Bertsch decried no-vote shares and what he described as a listing standards race to the bottom and a blurring of the distinctions between equity shares and other forms of securities.  Ms. Fisch elaborated on the importance of voting rights and their impact on public corporations, which she said are better governed than ever before.  Ms. Kumar maintained that firms offering passive index funds, while espousing the principle of one-vote, one-share, nonetheless are constrained to invest in certain companies with unequal voting rights.  A discussion with Committee members ensued. 

Report on Non-Public Administrative Session and Closing

Mr. Schacht announced that the Committee would engage in administrative activities following the public meeting.  With that, he adjourned the meeting shortly before 12:30 p.m.

[1]  Joseph V. Carcello, Craig Goettsch, Nancy LeaMond, and William D. Lee were absent.