Securities and Exchange Commission Investor Advisory Committee

Minutes of the Meeting on April 14, 2016

The Investor Advisory Committee (IAC) met on April 14, 2016, in a public meeting at the Securities and Exchange Commission’s headquarters in Washington, D.C.  The meeting convened at approximately 9:40 a.m. and was broadcast live by webcast

The following persons attended the meeting:

Commissioners of the Securities and Exchange Commission

  • Chair Mary Jo White (morning session only)
  • Commissioner Kara Stein
  • Commissioner Michael Piwowar

Advisory Committee Members[1]

  • Kurt Schacht, Chairman
  • Anne Sheehan, Vice Chairman
  • J. Robert Brown, Jr., Secretary
  • Joseph V. Carcello
  • Rick Fleming
  • Matthew Furman (by telephone)
  • Roger Ganser
  • James Glassman (morning only)
  • Craig Goettsch
  • Stephen Holmes
  • Adam M. Kanzer
  • Roy Katzovicz
  • William D. Lee
  • Barbara Roper
  • Jean Setzfand (morning only)
  • Damon Silvers
  • Steven Wallman
  • Susan Wyderko


Opening Remarks

Chairman Kurt Schacht opened the meeting by observing that the Committee had reached an inflection point:  the initial four-year term of the original class of IAC members was nearing its end.  Chair White, also taking note of the expiring terms, thanked all Committee members for their dedication and service. She provided an update on the Commission’s recent activities, including the release the previous day of a Concept Release on modernizing certain business and financial disclosures required by Regulation S-K.  The Chair also took note of the importance of the meeting agenda topics. 

Commissioner Stein emphasized the importance of two agenda items in particular:  enabling investors to understand mutual fund costs, and investor protection concerns related to cybersecurity, including what the Commission should be doing in this area. Commissioner Piwowar, noting a subcommittee recommendation that encouraged investor testing, declared his support for a robust investor testing program to examine the efficacy of various mutual fund cost disclosures.

Rick Fleming, the SEC Investor Advocate, observed that the meeting was taking place during Financial Literacy Month and National Retirement Planning Week.  He encouraged the Committee to consider ways that the Commission could address individuals’ inadequate savings for retirement.

Jan. 21, 2016, Meeting Minutes Approval

After a motion was made and seconded, the Committee voted to approve the minutes of its previous public meeting on January 21, 2016. 

Consideration of a Recommendation of the Investor as Purchaser Subcommittee Regarding Mutual Fund Cost Disclosure

On behalf of the Investor as Purchaser Subcommittee, Ms. Roper presented a draft Recommendation[2] regarding mutual fund cost disclosure.  The subcommittee proposed that the full committee adopt a recommendation for the Commission to explore ways to improve such disclosure, with a goal to enhance investors’ understanding of the actual costs they bear when investing in mutual funds and the impact of those costs on total accumulations over the life of their investment. This could be accomplished through standardized disclosure of actual dollar amount costs on customer account statements, among other things.

A discussion ensued on the merits of the proposal, with one committee member voicing reservations.  Mr. Ganser made a motion to approve the recommendation, and the motion was seconded.  The Committee voted without objection to adopt the recommendation.[3] 

Update from the SEC’s Office of Compliance Inspections and Examinations

Mr. Schacht introduced the two panelists: 

  • Marc Wyatt, Director, SEC Office of Compliance Inspections and Examinations (OCIE)
  • Peter B. Driscoll, Chief Risk and Strategy Officer, OCIE

Mr. Wyatt provided an overview of OCIE, which he described as transparent, risk-based, and data driven.  He added that OCIE supports the Commission by promoting compliance, preventing fraud, informing policy and monitoring risks.   Mr. Driscoll described the work of the new Risk and Strategy office within OCIE, which he heads. A discussion with Committee members followed.


The Committee went into recess at 11:53 p.m. for lunch and non-public subcommittee meetings.


The public meeting resumed at approximately 2 p.m. 

Subcommittee Report/Discussion

Mr. Katzovicz, Chair of the Investor as Owner Subcommittee, reported that, during the recess, members met with Commission staff who had drafted the Concept Release on Regulation S-K, which the Commission released the previous day.  [All Committee members met as a group for that presentation.]  Mr. Katzovicz added that the subcommittee was working on a draft letter addressing the Concept Release.  Mr. Schacht added that he expected the Committee to meet in the next couple months to consider approving that letter as well as a potential recommendation regarding disclosures for trading in municipal securities.

Discussion Regarding Cybersecurity and Related Investor Protection Concerns

Mr. Wallman introduced the four panelists, who gave opening remarks in the following order:

  • Brian J. Peretti, Director for the Office of Critical Infrastructure Protection and Compliance Policy, U.S. Department of the Treasury
  • John W. Carlson, Chief of Staff, Financial Services Information Sharing and Analysis Center (FS-ISAC), and Vice Chairman, Financial Services Sector Coordinating Council (FSSCC)
  • Matthew Chung, Managing Director and Chief Information Officer of Technology & Information Risk, Morgan Stanley
  • David Glockner, Regional Director, SEC Chicago Office, and head of the SEC cyber working group
  • Steven Polansky, Senior Director, Office of Regulatory Programs, FINRA

The panelists described their efforts to enhance the ability of firms in the financial services sector to withstand cyberattacks and maintain operational resilience.  The speakers explained the unique challenges that cyberattacks present, and they emphasized efforts to increase information-sharing and develop public-private partnerships to counter those threats. A robust discussion ensued among the panelists, Commissioners Stein and Piwowar, and the Committee members, touching on the role of government in general and the SEC in particular, questions of centralization vs. decentralization in the federal government’s efforts, and other issues. 

The Investor Advisory Committee Turns Four:  Reflections on the First Full Term of Investor Advisory Committee Membership,

With the terms of membership of the initial members of the Committee nearing expiration, the Committee reflected on its work to date and what it could and should do in the future.  Mr. Schacht led off the discussion with comments on aspects of the Committee process that he thought had gone well and areas where he believed there could be improvements.  The Chairs of the three current subcommittees and a former subcommittee—Ms. Roper, Mr. Katzovicz, Mr. Wallman, and Mr. Ganser—offered their observations and made suggestions for both the Committee and the Commission.


Mr. Schacht adjourned the meeting at 3:42 p.m.