June 05, 2009
SEC Forms Investor Advisory Committee
by Robert Kropp
Commission invokes its mandate to protect investors as a factor in the formation of the Committee,
which includes in its membership representatives of the social investment community.
In a marked departure from many of its activities under the previous Administration, the US Securities and Exchange Commission (SEC) announced on
June 3 the formation of an Investor Advisory Committee to give investors a greater voice in the
Commission's work. Commissioner Luis Aguilar will be the SEC's primary sponsor of the Committee.
In January, Commissioner Aguilar called for the
formation of a retail investors advisory committee. In a February speech by SEC Chairman Mary
Schapiro, she said, "The investor community needs to feel that they can go to the SEC to seek
redress, or to have their opinions heard. To that end, we will form an Investor Advisory Committee
to ensure that the Commission hears first hand about the issues most concerning to investors."
The stated mission of the SEC is to "protect investors, maintain fair, orderly, and efficient
markets, and facilitate capital formation."
Asked by SocialFunds.com about the factors
recommending the formation of the Committee, Commissioner Aguilar replied, "The Commission has, on
numerous occasions in the past few years, created advisory committees designed to receive input
from various participants in the capital markets or on particular regulatory topics. None of those
efforts, however, were targeted at hearing from investors – the very group that the SEC is charged
with protecting. After Chairman Schapiro came into office, she moved quickly to establish an
Stephen Davis, Senior Fellow and incoming Executive Director at Yale
University School of Management’s Millstein Center for Corporate Governance and Performance, has
been involved with corporate governance issues for twenty years. He told SocialFunds.com, "The
formation of the Committee sends an important signal that the SEC is open to accomplishing its real
mission, which is to be an advocate for investors. Opening such channels to the investment
community is long overdue, and I hope it will lead to better policies."
"What we are
seeing is movement by the SEC on issues important to the members of the Social Investment Forum" said Lisa Woll, CEO of the
nonprofit association dedicated to the practice and growth of socially responsible investing (SRI).
"The Committee provides a wonderful opportunity to ensure that the principles and priorities of the
SRI community are heard."
And Adam Kanzer, Managing Director and General Counsel of Domini Social Investments and a Committee member,
told SocialFunds.com, "That the SEC now believes it needs to hear from SRI firms is a new
The Investor Advisory Committee will advise the SEC on matters of concern to
investors, provide the SEC with the perspectives of its members on regulatory issues, and offer
recommendations from the viewpoints of investors on the SEC's regulatory programs. The Committee
will be co-chaired by Richard Hisey of AARP Financial and Hye-Won Choi of Teachers Insurance and Annuity Association, College Retirement
Equities Fund (TIAA-CREF).
The Committee represents a broad range of investor
perspectives, and includes three members of the Social Investment Forum. The three are Kanzer,
Mellody Hobson of Ariel Capital
Management, and Choi of TIAA-CREF.
Commissioner Aguilar said, "Under the Federal
Advisory Committee Act, membership on these types of committees must be broad and diverse. We were
advised that the committee members ought to represent the views of large and small investors;
institutional and individual investors; investors from different geographic regions and with
different investment philosophies and strategies. We worked hard to try to accomplish this."
Woll said, "Commissioner Aguilar's statements indicate that the staff and Commissioners of the
SEC really want to get input from a broad cross-section of the investment community."
Speaking about the makeup of the Committee, Kanzer said, "While Domini is the only focused SRI
investment advisor on the Committee, it does include plenty of sympathetic voices from different
Of the agenda that he and others plan to bring before the committee, Kanzer
said, "With the new Administration in place, now is the time to make a push for mandatory
reporting. Things have been changing globally during the last ten years, and governments have
stepped in to mandate environmental, social, and governance (ESG) reporting. There are a lot of
models out there to look at. We need to have better data."
Commissioner Aguilar seemed to
second this direction for the Committee's agenda when he told SocialFunds.com, "We expect to
discuss the issue of enhanced disclosure with the committee; this is an area in which the social
investment community has been intensely interested for several years."
And Davis said, "I
hope the work of the Committee will help the SEC provide important tools that investors need to
make their decisions, and I expect that the Committee will provide advice on such matters as
enhanced ESG disclosure."
According to Commissioner Aguilar, the Committee will meet 3-4
times per year. Its meetings will be public and its agenda noticed in advance. As of this writing,
a date for the first meeting has not been announced.
Referring to his appointment to the
Committee, Kanzer said, "It's an honor to be asked, and it will be fascinating to get an inside
view of the SEC at this important point in its history."
"We need a strong and well-funded
SEC," Kanzer continued. "The formation of the Committee signals a more shareholder-friendly
Commission, at the very least."
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