SEC Acting Chair Michael S. Piwowar focused on the "forgotten investor" in remarks delivered at the 2017 "SEC Speaks" Conference. (His reference to the "forgotten investor" is an allusion to Amity Shlaes' The Forgotten Man.)
Highlights of the address include:
- Special-Interest Disclosure. Acting Chair Piwowar stated that he directed SEC staff to begin reconsideration of two rulemakings mandated by the Dodd-Frank Act: the 2014 guidance on the conflict minerals rule and the pay ratio rule. He observed that President Trump and Congress vacated a third "burden" on the forgotten investor, the resource extraction rule.
- The "Accredited Investor" Threshold. Acting Chair Piwowar indicated that "there is a glaring need to move beyond the artificial distinction between 'accredited' and 'non-accredited' investors." He claimed that the "accredited status" disadvantages certain investors due to "the risk-return tradeoff" and a general decrease in portfolio diversity.
- Civil Monetary Penalties. Acting Chair Piwowar called on regulators to "remember the innocent investors who are so often the primary victims of the fraud" when considering civil monetary penalties on corporations in enforcement actions.
Acting Chair Piwowar reported that "during this period of transition," SEC staff will present four new disclosure recommendations at the agency's open meeting on March 1, 2017. The SEC will consider: (i) revising the Industry Guide 3 on statistical disclosure by bank holding companies; (ii) introducing a requirement to include exhibit hyperlinks and require HTML format in certain filings; (iii) requiring the use of "Inline XBRL" format for certain financial statements; and (iv) proposing amendments to Exchange Act Rule 15c2-12 municipal securities disclosure requirements.
At the conference, Investor Advocate Rick A. Fleming urged the SEC to "take more proactive steps to understand the needs of investors." Mr. Fleming encouraged the SEC to enhance its understanding of investors by: (i) direct outreach to investors; (ii) "scientific research regarding investors"; and (iii) increased engagement with the Investor Advisory Committee.
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