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Letter to Congress in Support of SEC’s Investor Advocate
October 5, 2021
The Honorable Maxine Waters Chairwoman
House Committee on Financial Services
Rayburn House Office Building
Washington, D.C. 20515
The Honorable Patrick McHenry Ranking Member
House Committee on Financial Services
Rayburn House Office Building
Washington, D.C. 20515
Re: A bill to amend the Securities Exchange Act of 1934 with respect to the Office of Investor Advocate, and for other purposes. (Discussion Draft).
Dear Chairwoman Waters and Ranking Member McHenry:
We write to express our support for draft legislation noticed in connection with today’s hearing that seeks to secure the independence of the SEC’s Office of the Investor Advocate (OIA) and ensure that this important office has the tools and resources to fulfill its statutory mandate.
As you know, Congress established the OIA in 2010 “to assist the SEC by advising and consulting on regulatory priorities.”[1] The four “core functions” of the OIA are (1) to provide a voice for investors; (2) to assist retail investors; (3) to study investor behavior, and (4) to support the SEC’s Investor Advisory Committee.[2] The OIA’s authorizing statute envisions a particularly robust research function, and specifically authorizes the OIA to retain or employ “research staff.” The OIA is also required to analyze the potential impacts on investors of proposed SEC and SRO rules, and to employ “appropriate statistical information and full and substantive analysis.”
The undersigned organizations have long supported the investor-focused mandate of the OIA. We agree with the Investor Advocate’s recent assertion that the role of the OIA is to be “proactive in determining the impact on investors of proposed rule changes and to conduct those efforts in accordance with methods…instead of relying solely on the notice-and-comment process and our own outreach.”[3] We also strongly support the OIA’s emphasis on “robust research” to support “evidence based rulemaking,” and we agree that empirical such data is at a minimum an essential supplement to the “regulatory intuition [of] Commission attorneys.”[4]
The OIA’s FY 2020 Report to Congress detailed several reforms that stand to significantly enhance the Office’s ability perform its statutory responsibilities. These reforms include dedicated funding, additional research staff, and greater flexibility to conduct and publish independent research.[5] The Discussion Draft would enact reforms to address these challenges, and otherwise enhance and modernize the OIA’s capacity to meet the high bar that Congress envisioned for the Office, including especially its mission of engaging in evidence-based advocacy for the benefit of investors. The reforms and improvements embodied in the bill are thoughtful, appropriate and necessary.
We strongly support the Discussion Draft and urge its introduction and passage.
Sincerely,
Dylan Bruce
Financial Services Counsel
Consumer Federation of America
Karen Barr
President
Investment Advisers Association
Geoffrey Brown, CEA
Chief Executive Officer
National Association of Personal Financial Advisors
Kevin R. Keller, CEA
Chief Executive Officer
Certified Financial Planner Board of Standards, Inc.
[1] See The Restoring American Financial Stability Act Of 2010, 111 S. Rpt. 176 (Apr. 30, 2010) at 103, available at https://www.congress.gov/111/crpt/srpt176/CRPT-111srpt176.pdf.
[2] https://www.sec.gov/page/investor-advocate-landing-page
[3] SEC Office of the Investor Advocate, FY 2020 Report to Congress, P. 12. December 2020. Accessible at https://www.sec.gov/files/sec-investor-advocate-report-on-activities-2020.pdf
[5] As of January 2021, the Commission had allocated the OIA only two permanent positions for research staff.