At an SEC Investor Advisory Committee meeting, SEC Chair Jay Clayton highlighted several areas of regulatory focus, including (i) improving environmental, social and governance ("ESG") data, (ii) harmonizing securities offering exemptions and (iii) ways to better protect retail investors.

Investors' Use of ESG Data in Investment/Capital Allocation Decisions

Mr. Clayton discussed two separate uses of ESG data for investment and capital allocation decisions: (i) the data that companies use to make operational decisions and (ii) the data that investors use to make investment decisions. He urged regulators to consider the variances in the approaches used by companies to conduct investment analysis. Mr. Clayton stated that in order to determine what information is "decision-useful," the complexities of data analysis must be recognized.

Harmonization of Securities Offering Exemptions

Mr. Clayton underlined the importance of the harmonization of securities offering exemptions for both investors and issuers. He asked regulators to consider how costs and complexity can be reduced while opportunity is increased for long-term Main Street investors.

Recommended Topics and Areas of Focus for the Investor Advisory Committee

Mr. Clayton outlined multiple topics for committee members to consider at the meeting, including:

  • if self-directed individual retirement accounts offer adequate investor protection;
  • how teachers and military service members can be better protected;
  • whether there are any boundaries that hinder access to investment services for minority and non-English-speaking communities;
  • how to ensure that retail investors (i) are provided access to the same level of investment opportunities as institutional investors in the private markets and (ii) receive sufficient investor protections;
  • whether retail investors understand their protections under the laws of jurisdictions other than the United States;
  • how the SEC can help market participants mitigate certain risks associated with the transition away from the London Inter-Bank Offered Rate (or "LIBOR");
  • whether retail investors understand the construction of indices from both a technical and market exposure perspective; and
  • the extent that retail investors rely on credit rating agencies, and whether credit rating agencies are adequately disclosing conflicts of interest.

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