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SEC Committee Considers Investor Issues

By    |   Friday, 07 February 2014 06:39 AM

The Securities and Exchange Commission's Investor Advisory Committee held its quarterly daylong meeting Jan. 31 at the SEC headquarters in Washington.

SEC Vice Chairman Craig Goettsch, of the Iowa Insurance Division, presided. All five commissioners were on hand to give welcoming remarks, and Commissioner Kara Stein stayed for the meeting.

The Investor Advisory Committee was created under the Dodd-Frank Act, and it falls under the Advisory Committee Act, which prescribes some rules as to how advisory committees are to conduct their business and requires agencies to pay attention to their recommendations. The Committee has four subcommittees: Investor as Owner, Investor as Purchaser, Market Structure and Investor Education.

In her welcoming remarks, SEC Chairman Mary Jo White stated that the Commission is hard at work on the Volcker rule to restrict proprietary trading by banks, as well as investments in hedge funds and private equity funds. She advised that once the rule is finalized, there would still be a need to adjust the pace of implementation and for the SEC to provide guidance (presumably in response to industry pressure to exempt transactions it argues are serving customer needs rather than taking positions for the banks).

Also she noted that regulations proposed under the Jumpstart Our Business Startups Act are open for comment through March 25, and the comment period for crowdfunding is about to close. She also announced that the SEC is close to appointing someone to the head position of Investor Advocate (nearly four years after Dodd-Frank created this position).

On other matters, White said the SEC is gathering information on possible universal proxy ballots, reviewing the recommendation on data tagging, as well as on fiduciary duties of broker-dealers and how to fund an investor adviser program. She acknowledged that the Committee would be working on recommendations concerning tick sizes, and she declared that the Committee's work is valuable to the SEC.

Jay Brown, a law professor at the University of Denver and secretary of the Investor Advisory Committee, reported on a series of meetings that officers had the previous day with White, Commissioners Luis Aguilar and Daniel Gallagher and with staff of the Senate Banking Committee to advise them of what the Committee is doing and to urge the SEC to respond more promptly to recommendations of the Committee. He also noted that an Investor Advocate is to be appointed soon and that this office is supposed to get three positions.

The rest of the morning was consumed by a polite but heated debate over a recommendation by the Market Structure and Investor as Owner Subcommittees that the Committee go on record in opposition to the pending proposal that the SEC conduct a pilot program on adjusting tick sizes to encourage wider spreads that advocates argue would lead in turn to more analyst coverage, more institutional investment, higher stock prices and more job creation. The majority view was that no design for such a program has yet been submitted that is likely to produce the desired results, but the door should be left open to proposals that might be productive.

(Archived video and related materials can be found here.)

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The Securities and Exchange Commission's Investor Advisory Committee held its quarterly daylong meeting Jan. 31 at the SEC headquarters in Washington.
Friday, 07 February 2014 06:39 AM
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