Recently, the SEC's Office of the Investor Advocate released its report on its fiscal 2019 activities. The report cites staffing challenges that have impaired the ability of the SEC's Ombudsmen to respond to matters brought by investors, which tripled in number during the fiscal year.

The report reviews the Office's activities in nine areas: public company disclosure, equity market structure, fixed income market reforms, accounting and auditing, standards of conduct for broker-dealers and investment advisers, exchange traded funds, enhanced disclosure for funds and variable annuities, transfer agents, and the impact of Kokesh v. SEC on enforcement actions.

The Office did not object to the various disclosure effectiveness initiative related rulemakings undertaken during the fiscal year. However, the Office did raise concerns in its comment letter submitted in July 2019 in response to the SEC's concept release on exempt offerings questioning assumptions implicit in the release that would in the view of the Office erode securities protections for investors were the SEC to adopt measures broadening the ability of retail investors to invest in exempt offerings. The Office also raises concerns relating to the SEC's proposal to amend the definition of accelerated filer (and the impact of such a change on the Sarbanes-Oxley Section 404(b) requirement), urging that the SEC conduct additional economic analysis to address criticisms raised during the comment process.

The Report highlights problematic investment products, which include, among others: initial coin offerings, cryptocurrency and blockchain related investments, real estate related investments, social sentiment investing tools, affinity fraud, and variable annuities sales practices. The Report also comments on risks associated with dual-share class structures and the LIBOR transition.

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2019. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.