COMMISSIONER AGUILAR'S REMARKS ON THE NEW INVESTOR ADVISORY COMMITTEE

FROM:  U.S. SECURITEIS AND EXCHANGE COMMMISSION
Public Statement by Commissioner:
Investor Voices Renewed: The New Investor Advisory Committee
by
Commissioner Luis A. Aguilar
Investor Advisory Committee
U.S. Securities and Exchange Commission
June 12, 2012
It is a pleasure to be here with you for the first meeting of the new Investor Advisory Committee. Before I begin, let me issue the standard disclaimer that the views I express today are my own, and do not necessarily reflect the views of the Securities and Exchange Commission, my fellow Commissioners, or members of the staff.

This important Committee was established by Congress to advise and consult with the Commission on a broad range of issues, initiatives and priorities affecting the public interest. I was honored to be the sponsor of the SEC’s first Investor Advisory Committee, which was formed in June 2009 to give investors a greater voice in the Commission’s work. That committee was terminated in November 2010, with the expectation that the Investor Advisory Committee provided for in the Dodd-Frank Act would soon be constituted. Although the ensuing delay was longer than expected, I am delighted that this Committee is now a reality.

Thank you for agreeing to serve on this new Investor Advisory Committee. I know that you all have other jobs and other responsibilities, and I appreciate your willingness to devote the time and effort required for this important task. I commend you for your public service.

The Committee’s statutory role calls for your input on regulatory priorities, on disclosure and other regulatory issues, on initiatives to protect investor interest, and on initiatives to promote investor confidence and the integrity of the securities marketplace.1 This work will be vital to the SEC and the American public.

As you undertake your work, I particularly urge you to focus on the needs of retail investors. These are the investors who, directly or indirectly, provide the bulk of all capital invested in securities. Numerous reports suggest many individual investors feel like they are under siege.2 According to a recent survey, only 15% of Americans trust the stock market.3 Investors continued to withdraw cash from U.S. equity funds in 2011, continuing a trend that has seen a total outflow of a half a trillion dollars from domestic equity funds since 2006.4 Some of this shift may be a natural result of the aging population of baby boomers.5 But research suggests there may also be a decline in the willingness of even younger investors to invest in the stock market.6 The reasons are many, but may include concerns such as those sparked by the May 2010 “Flash Crash,” the recent debacles of the BATS IPO and the Facebook IPO – and a market structure that is increasingly complex and opaque. All these factors contribute to a sense that Wall Street is rigged against the individual investor, damaging confidence and impeding capital formation.7

It is no wonder a recent survey found many Americans planning for retirement believe that keeping their money under the mattress is the most viable option.8

The participation of retail investors in our capital markets is crucial to our country's economic success. Yet – in contrast to many other groups that interact with the Commission – most individual investors lack the time and resources to mobilize in support of policy positions, participate in meetings with Commissioners and SEC staff, and make their needs known. Accordingly, I urge the IAC to put individual retail investors foremost in its considerations.

There are other issues that I am hopeful the Committee will tackle. These include: what the SEC can do to address the growing pressure on our nation's growing senior population and the increasing incidence of financial abuse to which they are subject;9 the disparate and confusing standards of conduct between broker-dealers and investment advisers; the desire of shareholders for input regarding the use of corporate resources; and investor demands for disclosure on diversity in corporate board rooms and leadership ranks.10

On these and other issues, investors and the American public are counting on your leadership.
I look forward to hearing your recommendations.
Thank you.