The SEC Office of the Investor Advocate ("Office") released an Annual Report on Objectives for fiscal year 2018.

The Office identified five areas of focus:

  • Public Company Disclosure: The Office noted that the SEC continues to be engaged in a comprehensive Disclosure Effectiveness Initiative to review and modernize public company reporting requirements. The Office also addressed the decline in initial public offerings (see previous coverage), and suggested that this downturn resulted partly from the trend away from investing in smaller companies. The Office committed to conducting a careful examination of market factors leading to the decline of IPOs, and to considering reforms that would facilitate investment in smaller companies.
  • Equity Market Structure: The Office identified Regulation NMS as a target for review and reform. In particular, the Office promised to review Rule 606 ("Order Routing"), and indicated that it will lobby the SEC to adopt a pilot program that adjusts fee caps under Rule 610. The Office also stated that it will review Regulation ATS and other areas, the goal of which will be to develop reforms that improve transparency.
  • Municipal Market Reform: The Office reported that it will "devote significant time and attention" to municipal market reform, noting that the "importance of the market to American households appears to be increasing." The Office stated that it will monitor developments in MSRB and SEC municipal market regulation closely, and will offer recommendations for enhancements.
  • Accounting and Auditing: The Office highlighted the lack of uniformity of certain accounting measures across companies, and the need for effective internal control over accounting measures. The Office also emphasized independent auditing as an important measure for monitoring internal controls.
  • Fiduciary Duty: In light of the DOL Fiduciary Rule, the Office stated that the SEC will face challenges in developing a reasonable standard of fiduciary duty. One especially challenging aspect, the Office noted, is the development of a uniform standard for investment advisers and broker-dealers, which could "dilute" the current standard for investment advisers.

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