REPORT ON OBJECTIVES FISCAL YEAR 2021

Office of the 

Investor

 Advocate

U.S. SECURITIES AND EXCHANGE COMMISSION

REPORT ON OBJECTIVES: FISCAL YEAR 2021 | i

OFFICE OF THE INVESTOR ADVOCATE

REPORT ON OBJECTIVES

FISCAL YEAR 2021

Section 4(g) of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. § 78d(g), requires 

the Investor Advocate to file two reports per year with the Committee on Banking, Housing, 

and Urban Affairs of the Senate and the Committee on Financial Services of the House of 

Representatives.1 A Report on Objectives is due no later than June 30 of each year, and its 

purpose is to set forth the objectives of the Investor Advocate for the following fiscal year.2 The 

instant report contains a summary of the Investor Advocate’s primary objectives for Fiscal Year 

2021, beginning October 1, 2020.

A Report on Activities is due no later than December 31 of each year, and it describes the 

activities of the Investor Advocate during the preceding fiscal year.3 For Fiscal Year 2021, the 

activities and accomplishments of the Office will be reported not later than December 31, 2021.

Disclaimer: Pursuant to Section 4(g)(6)(B)(iii) of the Exchange Act, 15 U.S.C. § 78d(g)(6)(B)(iii), this 

Report is provided directly to Congress without any prior review or comment from the Commission, any 

Commissioner, any other officer or employee of the Commission, or the Office of Management and Budget. 

Thus, the Report expresses solely the views of the Investor Advocate. It does not necessarily reflect the 

views of the Commission, the Commissioners, or staff of the Commission, and the Commission disclaims 

responsibility for the Report and all analyses, findings, and conclusions contained herein.

REPORT ON OBJECTIVES: FISCAL YEAR 2021 | iii

CONTENTS

MESSAGE FROM THE INVESTOR ADVOCATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

OBJECTIVES OF THE INVESTOR ADVOCATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

POLICY AGENDA FOR FISCAL YEAR 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Corporate Disclosure and Investor Protection in Registered and Exempt Offerings. . . . . . . 5

Proxy Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Equity Market Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Novel Exchange-Traded Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Registered Fund Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Broker Conduct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

THE IMPACT ON INVESTORS FROM COVID-19. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

OMBUDSMAN’S REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Service by the Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Service Behind the Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22

Streamlined Communications with Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . . .25

Standards of Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Areas of Interest and Importance to Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . .28

Ongoing Outreach to Investor Advocacy Clinics . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Objectives and Outlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

SUMMARY OF INVESTOR ADVISORY COMMITTEE 

RECOMMENDATIONS AND SEC RESPONSES . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 1

MESSAGE FROM THE

INVESTOR ADVOCATE

I

t remains a distinct privilege to lead the Office 

of the Investor Advocate into our seventh 

full fiscal year at the Securities and Exchange 

Commission. We are grateful for the support we 

have received from members of Congress and their 

staff, as well as the Chairman, Commissioners, and 

our colleagues at the Commission. We are deeply 

indebted to the investors and other stakeholders 

in our securities markets who have provided such 

thoughtful insights to us over the years as we have 

advocated for investors. 

As described in more detail below in our Policy 

Agenda for Fiscal Year 2021, we expect to be 

actively engaged in advocacy efforts on a number 

of fronts in the coming year. For example, we are 

becoming increasingly concerned about efforts to 

expand the private markets, which may have the 

unintended consequence of further weakening the 

public markets that have served investors so well. 

We are deeply concerned about shareholder rights, 

and particularly the ability of investors to cast votes 

efficiently, to have their votes counted accurately, 

and to obtain voting advice without interference 

from company management. We will continue to 

support the Commission’s efforts to improve equity 

market structure, and we will assist in finding 

improvements to disclosures by registered funds. 

Finally, we will remain vigilant in our review of 

policies related to novel exchange-traded funds and 

broker conduct. 

We are also examining the impact on investors 

from COVID-19 and the resulting economic 

turmoil. In this report, we provide an initial 

glimpse into how investors are reacting to the 

global pandemic, particularly with respect to their 

retirement savings. So far, 

it appears that investors 

are largely reacting calmly 

in the face of recent 

market volatility. We 

will continue to focus 

on this issue and will 

make recommendations 

to policymakers as 

appropriate.

In addition to our policy 

work, we will continue to provide direct service 

to investors who have concerns about the SEC or 

the self-regulatory organizations (SROs) overseen 

by the SEC. Ombudsman Tracey McNeil and her 

team interact with investors on a daily basis, and 

their activities and objectives are described in the 

Ombudsman Report below. We also will continue 

our efforts to utilize surveys and other research 

methods to glean more insights about the investors 

we serve. For instance, we will continue to study 

how individual investors process information to 

make important financial decisions. 
2 | OFFICE OF THE INVESTOR ADVOCATE

It is important to note that, while our work has 

increased in complexity and volume, the staffing 

allocated to some of our functions has remained 

largely unchanged since the inception of the 

office in 2014. For example, the Ombudsman 

has recently been granted approval to hire a 

second staff attorney, but even with this additional 

resource, we will struggle to carry out our statutory 

mandates and provide more than a cursory level of 

service to investors. Moreover, our enabling statute 

contemplates that the Office will be staffed not 

only with attorneys who serve as policy advisors, 

but also “research staff” to help us understand 

the investor population and the potential impacts 

to investors from changes in SEC or SRO rules. 

We have two economists on staff currently, but 

to perform our function as Congress intended, 

we will need additional research staff to help us 

conduct data-driven analysis and get past the 

Commission’s traditional reliance upon intuition to 

determine what is in the best interests of investors. 

We acknowledge that Congress faces significant 

fiscal challenges, but we respectfully request 

consideration of our mission-critical needs as you 

review the SEC’s budget in the coming year.

On behalf of the talented women and men in the 

Office of the Investor Advocate who tirelessly 

work for the benefit of American investors, I 

proudly submit this report on our objectives for 

the coming year. As always, I would welcome the 

opportunity to provide additional information to 

Members of Congress.

Respectfully Submitted,

Sincerely,

Rick A. Fleming

Investor Advocate 
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 3

OBJECTIVES OF THE 

INVESTOR ADVOCATE

As set forth in Exchange Act Section 4(g)

(4), 15 U.S.C. § 78d(g)(4), the Investor 

Advocate is required to perform the 

following functions:

(A) assist retail investors in resolving 

significant problems such investors 

may have with the Commission or with 

self-regulatory organizations (SROs);

(B) identify areas in which investors would 

benefit from changes in the regulations 

of the Commission or the rules of SROs;

(C) identify problems that investors have 

with financial service providers and 

investment products;

(D) analyze the potential impact on 

investors of proposed regulations of the 

Commission and rules of SROs; and

(E) to the extent practicable, propose 

to the Commission changes in 

the regulations or orders of the 

Commission and to Congress any 

legislative, administrative, or personnel 

changes that may be appropriate to 

mitigate problems identified and to 

promote the interests of investors.

Assisting Retail Investors

Exchange Act Section 4(g)(4)(A) directs the 

Investor Advocate to assist retail investors in 

resolving significant problems that investors may 

have with the Commission or with SROs.4 To help 

accomplish that objective, the Investor Advocate 

has appointed an Ombudsman to, among other 

things, act as a liaison between the Commission 

and any retail investor in resolving such problems.5

As required by statute, a semi-annual report from 

the Ombudsman is included within this Report 

on Objectives.6

Identifying Areas in Which Investors Would 

Benefit from Regulatory Changes

Exchange Act Section 4(g)(4)(B) requires the 

Investor Advocate to identify areas in which 

investors would benefit from changes in the 

regulations of the Commission or the rules of 

SROs.7 This is a broad mandate that authorizes the 

Investor Advocate to examine the entire regulatory 

scheme, including existing rules and regulations, 

to identify those areas that could be improved for 

the benefit of investors. For example, the Investor 

Advocate may look at the rules and regulations 

governing existing equity market structure to 

determine whether any regulatory changes would 

benefit investors. These and other concerns are 

discussed in greater detail below in the section 

entitled Policy Agenda for Fiscal Year 2021.
4 | OFFICE OF THE INVESTOR ADVOCATE

Identifying Problems with Financial Service 

Providers and Investment Products

Exchange Act Section 4(g)(4)(C) requires the 

Investor Advocate to identify problems that 

investors have with financial service providers 

and investment products.8The Investor Advocate 

continues to monitor investor inquiries and 

complaints, SEC and SRO staff reports, 

enforcement actions, and other data to determine 

which financial service providers and investment 

products may be problematic. As required by 

Exchange Act Section 4(g)(6), these problems will 

be described in the Reports on Activities to be filed 

in December of each year.

Analyzing the Potential Impact on Investors 

of Proposed Rules and Regulations

Exchange Act Section 4(g)(4)(D) directs the 

Investor Advocate to analyze the potential 

impact on investors of proposed regulations of 

the Commission and proposed rules of SROs.9

As required, in Fiscal Year 2021 the Office 

will review all significant rulemakings of the 

Commission and SROs, and we will communicate 

with investors and their representatives to 

determine the potential impact of proposed rules. 

In addition, we will study investor behavior and 

utilize a variety of research methods to examine 

the efficacy of policy proposals.

Proposing Appropriate Changes 

to the Commission and to Congress

Exchange Act Section 4(g)(4)(E) provides that, 

to the extent practicable, the Investor Advocate 

may propose to the Commission changes in the 

regulations or orders of the Commission and 

to Congress any legislative, administrative, or 

personnel changes that may be appropriate to 

mitigate problems identified and to promote the 

interests of investors.10 As we study the issues in 

our Policy Agenda for Fiscal Year 2021, as set forth 

below, we will likely make recommendations to the 

Commission and Congress for changes that will 

promote the interests of investors.

Supporting the Investor 

Advisory Committee

Exchange Act Section 39 establishes the Investor 

Advisory Committee (IAC or Committee).11 As 

discussed in greater detail below in the section 

entitled Summary of Investor Advisory Committee 

Recommendations and SEC Responses, the 

purpose of the Committee is to advise and consult 

with the Commission on regulatory priorities, 

issues impacting investors, initiatives to protect 

investors, and related matters. The Investor 

Advocate is a member of the IAC,12 and the Office 

will continue to provide staff and operational 

support to the IAC during Fiscal Year 2021.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 5

POLICY AGENDA FOR 

FISCAL YEAR 2021

As described above, the statutory mandate 

for the Office of the Investor Advocate 

is broad, and much of our time is 

consumed with the review of rulemakings that 

flow through the Commission and SROs. We 

monitor all rulemakings, but we prioritize certain 

issues so that we can develop expertise in those 

areas and maximize our impact for investors with 

the resources we have available. After discussions 

with numerous knowledgeable parties, both 

inside and outside the Commission, and after 

due consideration, the Investor Advocate has 

determined that the Office will focus upon the 

following issues during Fiscal Year 2021:

§	Corporate Disclosure and Investor Protection 

in Registered and Exempt Offerings

§	Proxy Voting

§	Equity Market Structure

§	Novel Exchange-Traded Funds

§	Registered Fund Disclosure

§	Broker Conduct

As in past years, numerous other issues are likely to 

arise that will require the attention of the Office.

CORPORATE DISCLOSURE AND 

INVESTOR PROTECTION IN 

REGISTERED AND EXEMPT OFFERINGS

As described in our prior reports, the Commission 

has undertaken a comprehensive Disclosure 

Effectiveness initiative to review and modernize 

public company reporting requirements. The 

disclosure rules govern the information that is 

communicated in registration statements, routine 

periodic reports, and proxy statements. The 

rulemaking proposals have been in the nature of 

streamlining, clarifying, and updating rules where 

feasible, all in a way intended to facilitate timely, 

material disclosure by companies and investors’ 

access to that information. During Fiscal Year 

2021, we anticipate that the Commission will 

continue to finalize rulemaking proposals that 

remain outstanding. 

At this juncture, we can make some observations 

about what the Commission is and is not doing 

with respect to its Disclosure Effectiveness 

initiative. For example, the Commission has 

received calls from investor groups to improve 

disclosures related to human capital management 
6 | OFFICE OF THE INVESTOR ADVOCATE

as companies have grown increasingly dependent 

on their workforces as a source of value creation.13

How to elicit material, decision-useful information 

on a company-specific basis has been a matter of 

considerable debate.14 On August 8, 2019, the 

Commission proposed replacing a requirement 

to disclose the number of employees with a 

requirement to disclose a description of the 

registrant’s “human capital resources,” including 

in the description “any human capital measures 

or objectives that management focuses on in 

managing the business.”15 There is a broad caveat 

that this disclosure would be required only to 

the extent material to an understanding of the 

registrant’s business as a whole.16 The Commission 

declined to propose more prescriptive disclosure 

requirements—such as metrics on workforce 

cost, turnover, and diversity, for instance—on the 

rationale that there is too much variability across 

industries, and even amongst companies within the 

same industry, for human capital considerations 

to be conducive to reporting standards.17 The 

prevailing view at the Commission appears 

to be that a single principles-based disclosure 

requirement would best serve investors by eliciting 

insight into how each company thinks about 

its human capital, and by sparing all concerned 

from the production of disclosure that may be 

irrelevant.18 However, this remains an area that 

continues to evolve.19 There are private-sector 

initiatives seeking to align and consolidate, to 

the extent possible, themes from existing privatesector, voluntary reporting frameworks in order to 

catalyze standardization in reporting.20 In Fiscal 

Year 2021, we will follow these developments 

and consider the utility of more prescriptive 

disclosure requirements in addressing investors’ 

informational needs.

Information accessibility is another fluid topic. 

We have long advocated the mandatory use 

of structured and standardized disclosures 

and identifiers as central to modernization, 

simplification, and burden-reduction for both 

registrants and investors.21 Some disclosures are 

now provided in a format that is both machinereadable and human-readable, which means that 

they can be accessed, analyzed, and queried much 

more effectively.22 The OPEN Government Data 

Act, signed into law on January 14, 2019, provides 

a sweeping, government-wide mandate for all 

federal agencies to publish government information 

in a machine-readable format by default.23 This 

has major implications for registrant disclosure, 

which the Commission has yet to address. In recent 

Disclosure Effectiveness rulemaking proposals, 

the Commission has sought to rework substantive 

disclosure requirements so as to discourage 

potentially redundant or otherwise immaterial 

disclosure.24 It has also encouraged the use of 

hyperlinks and other text-based cross-references 

to make documents more easily navigable.25 These 

improvements cater to investors accustomed to 

manually accessing and analyzing information 

via paper-based documents.26 However, the 

Commission has often bypassed opportunities 

to incorporate the structuring of important data 

that is found outside of financial statements.27

We expect that the Commission will in the future 

face increasing pressure to take into account 

machine-readability as a government mandate 

and, increasingly, an investor mandate, as we 

see continued leveraging of digital processes by 

investors, financial professionals, and other users of 

SEC-mandated disclosures. 
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 7

A more fundamental concern is the growing 

obsolescence of the current registration and 

reporting regime as Congress and the Commission 

have continually expanded the exemptions from 

the registration requirements over the years. At 

their core, the Securities Act of 1933 and the 

Securities Exchange Act of 1934 contain a simple 

proposition: a company can raise money from the 

general public if it provides fulsome disclosure 

of all the information that investors would 

consider important in making investment and 

voting decisions. This policy was implemented, 

in part, to restore investor confidence and boost 

economic activity during the Great Depression,28

and it led to a capital formation ecosystem that 

is often called the envy of the world.29 But, over 

time, the expansion of exemptions has made 

it easier for companies to raise capital without 

triggering reporting obligations, allowing modern 

businesses to grow to much larger proportions 

while withholding information that otherwise 

would be required to be disclosed under the 

securities laws.30As a result, the amount of capital 

raised annually in exempt markets has eclipsed the 

amount raised in the public registered markets.31

We now have hundreds of so-called unicorns, 

which are unregistered companies with billiondollar capitalizations and dispersed shareholder 

ownership patterns.32 Meanwhile, the number 

of domestic operating companies listed on major 

U.S. exchanges has declined,33 and holders of these 

listed companies’ shares may be surprised to find 

out how many such companies could voluntarily 

deregister and cease reporting.34

These developments can be traced back to a 

series of legislative and regulatory actions over 

the last four decades, all of which has been 

well documented.35 What is most noteworthy, 

however, is that Congress and the Commission 

continue to promote efforts to encourage more 

companies to become public, on the one hand, 

while pursuing other initiatives that conflict with 

that laudable goal. In our view, there should not 

be further expansion of registration exemptions 

without consideration of whether the exemptions 

undermine the public markets that have served 

investors of all types so well.36 Recent rulemaking 

releases regarding the Securities Act registration 

exemptions would have been more informative if 

the Commission had provided a more searching 

analysis of the trends and articulated what it 

envisions as the purpose or value of registered 

offerings in the capital formation ecosystem.37 We 

will continue to draw attention to this problem 

and advocate solutions that favor the level of 

investor protection that comes with registration 

and reporting. 

PROXY VOTING

In the past year, the Commission has proposed 

two amendments that would impact the ability 

of investors to vote their shares on matters 

related to corporate governance. In one of the 

rulemakings, the Commission has proposed to 

require proxy advisors, who are third parties hired 

by shareholders for advice and assistance in voting 

their shares, to act as a conduit for companies 

to provide a rebuttal to the advice given by the 
8 | OFFICE OF THE INVESTOR ADVOCATE

proxy advisors.38 In the second rulemaking, the 

Commission proposed to amend Exchange Act 

Rule 14a-8 to raise the ownership thresholds 

that an investor must meet in order to submit a 

proposal for a vote by other shareholders.39 Both of 

these rulemakings have been criticized extensively 

by the investor community as an attack on 

shareholder rights.

Much of the concern expressed by investors 

has centered on the economic analysis in the 

rulemakings. For example, the SEC’s Investor 

Advisory Committee submitted a recommendation 

to the Commission that it revise and repropose 

the rules, citing a number of ways in which 

the proposing releases failed to meet the SEC’s 

published guidance for conducting economic 

analyses.40 The recommendation also noted that 

there are well-known problems with respect to 

so-called “proxy plumbing,” or the processes 

by which shares are voted and counted, and 

suggested that the Commission should prioritize 

efforts to address those concerns. In other words, 

before addressing concerns of the business 

community about the advice investors seek, the 

Commission should ensure that investors’ votes 

are actually counted. 

The Investor Advocate, as a member of the 

Investor Advisory Committee, voted in favor of 

the recommendation to revise and repropose the 

rules. It is our hope that the Commission will follow 

this advice, and the advice of the vast majority of 

investors who submitted comments, before moving 

to final adoption. In Fiscal Year 2021, we also 

will continue to advocate for improvements to the 

proxy plumbing that investors and other market 

participants have sought for so long.

EQUITY MARKET STRUCTURE

As noted in our prior Reports on Objectives, the 

Commission has been engaged in a multi-year effort 

to improve the environment for modern trading.41

We have supported a number of regulatory 

proposals that were adopted, including amendments 

to Rule 606 to require broker-dealers to disclose the 

handling of institutional orders to customers42 and 

a rule to conduct a transaction fee pilot for NMS 

Stocks.43 Although the transaction fee pilot was 

recently struck down in the U.S. Circuit Court of 

Appeals for the District of Columbia, we hope the 

Commission can take that ruling into account and 

continue to address the underlying concerns that 

motivated the proposed pilot.

During Fiscal Year 2021, we will continue to 

encourage the pursuit of initiatives to enhance the 

capital markets and benefit investors, including 

finalizing several Commission initiatives that 

are already in motion this year. For example, 

in September 2019, the Commission proposed 

amendments to Rule 15c2-11. This rule currently 

requires a broker-dealer to review certain issuer 

information and have a reasonable basis for 

believing such information is accurate before 

initiating quotations for “over-the-counter” 

securities, but then allows the quotes to 

continue indefinitely, even after current public 

information about the issuer becomes stale.44 This 

indefinite exception may permit unscrupulous 

market participants to more easily engage in 

pump-and-dump retail fraud. We support the 

adoption of amendments to this rule that would 

deter such behavior.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 9

In May 2020, the Commission adopted an order 

directing the exchanges and FINRA to modernize 

the governance of National Market System (NMS) 

plans that produce public consolidated equity 

market data and disseminate trade and quote data 

from trading venues.45 During Fiscal Year 2021, we 

intend to review the amendments submitted by the 

SROs in response to this order to ensure that the 

proposed improvements to the governance of NMS 

plans allow for appropriate representation of retail 

and institutional investors.

Similarly, in February 2020, the Commission 

proposed to modernize the infrastructure for the 

collection, consolidation, and dissemination of 

market data for exchange-listed NMS stocks.46

If adopted as proposed, this might provide key 

upgrades to the content and infrastructure for 

“core data” that is consolidated and widely 

distributed by central securities processors (the SIP). 

Improving the infrastructure around market data in 

these ways could ultimately benefit retail investors, 

either directly or as participants in mutual funds 

and pension funds. We intend to the support the 

adoption of this rule in the near future and its 

implementation in Fiscal Year 2021.

There are numerous other relevant initiatives that 

we hope the Commission will be able to move 

forward with in the near future, including:

§	Pilot programs for thinly-traded securities to 

explore the effects of restricting unlisted trading 

privileges (UTP) which otherwise permit all 

exchanges to act as separate trading venues for 

the listed security. Concentrating liquidity on the 

primary listing exchange could make it easier 

for buyers and sellers to find each other and 

consummate trades in this smaller segment of 

the equity market. Such a pilot could also allow 

for other innovative market structure solutions, 

including periodic auctions. 

§	Enhancements to the rules governing transfer 

agents, as previously discussed in a December 

2015 advanced notice of rulemaking and a 

concept release,47 which could, in part, specify 

transfer agent obligations with respect to the 

tracking and removal of restrictive legends. If 

improved rules can prevent the improper or 

inappropriate removal of a legend, investors 

would be better protected from the harm that 

comes from the illegal public distribution of 

such securities. 

§	Implementation of the Commission’s 

Consolidated Audit Trail. This system, years 

in the making and years behind schedule, is 

intended to enhance, centralize, and generally 

update the regulatory data infrastructure 

available to market regulators.48

During Fiscal Year 2021, we intend to continue our 

engagement on all of these issues. 

In addition to evaluating rulemaking by the 

Commission during Fiscal Year 2021, we will 

continue to examine the hundreds of rule proposals 

that are filed with the Commission by the SROs. 

Typically, a number of these filings involve market 

structure issues that impact investors. For example, 

in December 2019, the Investors Exchange LLC 

(IEX) proposed a new displayed order type that 

could potentially protect liquidity providers, 

including institutional investors, from adverse 

selection by latency arbitrage trading strategies.49

Institutional investors are largely supportive of 

this proposal,50 but the Commission has asked 
10 | OFFICE OF THE INVESTOR ADVOCATE

for further analysis as to whether the proposal’s 

discrimination is fair and whether its burden on 

competition is necessary. Where appropriate, we 

will make formal or informal recommendations to 

ensure that the needs of investors are given a high 

priority by the SROs and the Commission. 

We are also monitoring recent legislation51 and 

SRO rulemakings52 that address the risks to 

American investors posed by foreign companies 

that are listed on U.S. exchanges or included 

in popular stock indexes while the PCAOB is 

restricted from inspecting the work of their 

auditors. Under the best of circumstances, investing 

in foreign companies involves a heightened degree 

of risk, including macroeconomic risk, political 

risk, and regulatory risk. There is a wealth of 

academic literature addressing a wide range of 

challenges related to international investing, 

such as information asymmetries, volatility, 

corporate structure, variations in the quality of 

corporate governance, variations in enforceability 

of shareholder rights, and variations in cultural 

norms and tolerance of corruption. These and 

other factors make it all the more important for 

U.S. investors to receive high quality, accurate, 

and reliable disclosures from foreign companies. 

Moreover, we believe there should be a level 

playing field for all companies listed on U.S. 

exchanges. Thus, we will support sensible 

legislation and regulatory interventions that help to 

achieve these goals. 

NOVEL EXCHANGE-TRADED FUNDS

We will continue to focus on developments in 

the exchange-traded fund (ETF) marketplace in 

Fiscal Year 2021. As we discussed previously in 

our Report on Activities for Fiscal Year 2019,53

on September 25, 2019, the Commission adopted 

a new rule and form amendments designed to 

modernize the regulation of ETFs by establishing 

a clear and consistent framework for the vast 

majority of ETFs operating today (the ETF Rule).54

We welcomed the adoption of the ETF Rule at the 

time, noting that it included important investor 

protection safeguards, such as requiring an ETF 

to provide full daily portfolio transparency on its 

website,55 as well as a condition expressly excluding 

leveraged and inverse ETFs from the rule’s scope.56

The ETF marketplace continues to evolve, 

however, and certain developments warrant our 

continued attention and engagement. Specifically, 

we are attentive to the entry into the marketplace 

of certain ETFs that do not provide full daily 

portfolio transparency (non-transparent ETFs), the 

Commission’s approval of exemptive relief for a 

newer generation of non-transparent ETFs, and the 

Commission’s recent proposal to amend the ETF 

Rule to bring leveraged and inverse ETFs within 

the rule’s scope. The novel ETFs at issue in these 

recent developments may present special investor 

protection concerns.

First, pursuant to exemptive relief that the 

Commission granted to Precidian ETFs Trust on 

May 20, 2019,57 non-transparent ETFs began 

trading on an exchange for the first time on 

April 2, 2020.58 This development represents a 

departure from the way that ETFs have typically 

functioned. For example, a traditional ETF with 

full daily portfolio transparency can rely on 

financial institutions to directly identify and act 

on arbitrage opportunities when the market value 
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 11

of the ETF’s shares are over- or under-valued 

relative to the ETF’s portfolio holdings. In contrast, 

non-transparent ETFs instead provide confidential 

information concerning the securities that the ETF 

would exchange for its shares to agents working 

on behalf of such financial institutions. The agents 

then facilitate the transactions expected to keep 

the market value of the ETF’s shares in line with 

the value of the ETF’s holdings.59 It is not yet clear 

whether this novel variation on the traditional ETF 

arbitrage mechanism will function as anticipated or 

whether investors in these funds will be kept fully 

informed of the risks associated with transacting in 

non-transparent ETFs.

Second, not long after granting exemptive relief to 

the first generation of these novel non-transparent 

ETFs described above, the Commission followed 

up by granting exemptive relief to several other 

types of non-transparent ETF models (sponsored 

by other institutions) on December 10, 2019.60

The details of these models vary slightly amongst 

each other. Generally, however, each provides daily 

information regarding a “proxy portfolio” in lieu 

of providing full daily portfolio transparency. The 

proxy portfolios are intended to give financial 

institutions enough information to engage in 

transactions that mimic the traditional ETF 

arbitrage mechanism. As with the first generation 

of non-transparent ETFs, it is unclear whether 

these alternate variations on the traditional ETF 

arbitrage mechanism will function as anticipated or 

whether investors in these funds will be kept fully 

informed of the risks associated with transacting 

in non-transparent ETFs. In a November 19, 2019 

joint statement, Commissioners Robert Jackson 

and Allison Lee observed that non-transparent 

ETFs “come with real risk that, in moments of 

limited liquidity, ordinary investors will face wider 

spreads and hence get prices that do not accurately 

reflect the value of their shares.”61 Commissioners 

Jackson and Lee also expressed concern over the 

appropriate disclosure regime for non-transparent 

ETFs, stating, “in particular, we wonder whether 

additional disclosure of the risks, as well as 

enhanced board oversight of the efficiency of these 

ETFs, is necessary . . . we are only in the early 

stages of determining the information investors 

need to evaluate the unique risks of nontransparent 

ETFs, including mechanisms to ensure accuracy 

and price efficiency.”62 Now that these products are 

in the marketplace, we will monitor their usage and 

examine whether they are functioning as intended 

while maintaining investor protections.

Finally, on November 25, 2019, as part of a 

broader rulemaking effort relating to funds’ use of 

derivatives, the Commission proposed to permit 

leveraged and inverse ETFs to form and operate 

without obtaining individualized exemptive relief 

at all (the Derivatives Proposal).63 After expressly 

excluding leveraged and inverse ETFs from 

the ETF Rule adopted two months earlier, the 

Commission proposed amending the ETF Rule 

to include leveraged and inverse ETFs within 

its ambit, on par with the plain vanilla ETFs 

contemplated by the ETF Rule. Although the 

Commission has long recognized special investor 

protection concerns associated with leveraged and 

inverse ETFs,64 the Derivatives Proposal contends 

that such concerns can be mitigated by subjecting 

the ETFs to new sales practice rules, obviating the 

need for any individualized leveraged and inverse 

ETF exemptive relief.65
12 | OFFICE OF THE INVESTOR ADVOCATE

We look forward to continued engagement with 

Commission staff in Fiscal Year 2021 to help 

ensure that these and other innovations in the 

ETF marketplace are accompanied by appropriate 

investor safeguards and rigorous enforcement of 

the new standards.

REGISTERED FUND DISCLOSURE

In Fiscal Year 2021, we will renew our focus on the 

effectiveness of disclosure provided to investors in 

SEC-registered funds. Such disclosure is at the heart 

of the Commission’s efforts to help ensure that 

investors are making thoughtful, well-informed 

decisions about their investments as they save for 

college expenses, look towards retirement, or plan 

for other goals.

The Commission has taken steps to provide 

registered fund investors with clear, concise 

disclosure regarding funds’ investment strategies, 

risks, costs, and other attributes. On June 5, 

2018, for example, the Commission issued 

a request for comment seeking input from 

individual investors and other interested parties 

on enhancing disclosures by mutual funds, ETFs, 

and other types of investment funds to improve 

the investor experience and to help investors make 

more informed investment decisions (the Investor 

Experience RFC).66 Responses to the Investor 

Experience RFC have since aided rulemaking 

efforts within the Commission’s Division of 

Investment Management, including the recent 

adoption of a new rule and related form and rule 

amendments to simplify and streamline disclosures 

for investors about variable annuities and variable 

life insurance contracts.67

Additionally, on May 21, 2020, the SEC’s 

Investor Advisory Committee approved a new 

Recommendation on Disclosure Effectiveness, 

acknowledging that the Commission faces a 

daunting challenge in developing disclosures that 

are effective in helping investors choose among 

“virtually limitless” investment options. According 

to the Committee, “the factors to consider in an 

effort to identify the best or most appropriate 

option can be numerous and difficult to analyze,” 

and that “further complicating the SEC’s task is the 

fact that many investors lack relevant knowledge 

needed to fully understand the disclosures designed 

to help them make investment decisions.”68 The 

Committee indicated that improving the quality of 

the Commission’s disclosure is an achievable goal, 

however, and set forth a number of principles that 

the Committee believes should guide rulemaking 

efforts in this area.

Meanwhile, the Office of the Investor Advocate 

itself is pursuing such efforts by utilizing surveys, 

focus groups, and other methods to gain insight 

into investor behavior and provide data regarding 

disclosure-related policy choices. We expect these 

efforts to produce valuable information in the 

upcoming reporting period and beyond.

We anticipate, then, that the effectiveness of 

disclosure provided to investors in SEC-registered 

funds will remain as central as ever to Commission 

initiatives in Fiscal Year 2021, and we look forward 

to working with our colleagues to continuously 

improve and enhance the information provided to 

registered fund investors.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 13

BROKER CONDUCT

In Fiscal Year 2020, we highlighted two items 

relevant to broker-dealer conduct as it relates to 

retail investors: (1) the Commission’s new “best 

interest” standard of conduct for recommendations 

(which replaced the prior suitability standard);69

and (2) the persistent problem of broker migration 

and misconduct.70

With Regulation Best Interest (Reg BI) to be 

implemented by June 30, 2020, we intend to 

monitor how the Commission and FINRA use the 

new tools to address unethical or abusive conduct 

in the brokerage business. As our Office said at the 

time of adoption, the elimination of sales contests, 

the enhanced disclosures of conflicts of interest, and 

many other adjustments in the rule should improve 

the outcome for retail investors compared to the 

old suitability standard. However, Reg BI must be 

enforced rigorously enough to ensure that broker 

behavior matches customers’ expectations when 

receiving investment advice from their brokers. As 

appropriate, our office will work to ensure retail 

investors benefit as much as possible from the 

implementation during Fiscal Year 2021.

As to broker migration and misconduct, studies 

show a strong correlation between the frequency 

with which a broker moves between firms and the 

risk posed by that broker to his or her customers.71

Research has also identified a propensity for roving 

bad brokers to congregate at high-risk firms with 

other brokers of similar character (sometimes 

referred to as “cockroaching”).72

In May 2019, FINRA published a request for 

comment on proposed rules targeting firms 

with a disproportionate history of broker and 

other misconduct relative to their similarly-sized 

peers. The proposed new Rule 4111 (Restricted 

Firm Obligations)73 would impose conditions 

or restrictions on member operations, including 

requirements for deposits of cash or qualified 

securities that could not be withdrawn without 

FINRA’s prior written consent, if a firm exceeds 

a certain threshold calculation of broker or other 

misconduct.74

Generally, we expect to continue to encourage 

FINRA to crack down on broker migration and 

misconduct. Effective regulation of bad actors, both 

individuals and firms, is critical to the safety of 

retail investors. As such, we intend to monitor this 

specific rulemaking, as well as related initiatives, 

during the next fiscal year. Our review will likely 

consider, among other things: how to properly 

account for purged or non-public information 

relevant to broker risk,75 specific weightings 

assigned to the proposed categories of risk events 

or conditions, relevant aggravating circumstances 

(e.g., hiring of extreme recidivist brokers, brokers 

who have previously migrated excessively, and 

brokers who have preyed on seniors), proper 

calibration of the percentage thresholds and 

deposit amounts specified in the proposed rule, the 

procedures governing the remediation76 and appeals 

process, and comments by other proponents for 

retail investors. 
14 | OFFICE OF THE INVESTOR ADVOCATE

In April 2020, FINRA filed a separate proposed 

rule change to address another set of risks 

presented by individual brokers with a significant 

history of misconduct.77 Currently, FINRA 

disciplinary actions can involve several hearings 

and appeals, effectively forestalling the imposition 

of disciplinary sanctions and their potential 

deterrent effect on bad actors. For those brokers 

appealing disciplinary matters, this new rule would, 

among other times, allow hearing officers to 

impose conditions or restrictions on the activities 

of a firm or the broker and to require the firm to 

adopt heightened supervisory procedures during the 

course of the appeal. These new rules could protect 

investors by strengthening the tools available to 

FINRA and its hearing officers to address the 

risks posed by brokers with history of misconduct 

with a tailored approach. We intend to support 

the adoption of the rule and its implementation in 

Fiscal Year 2021.

Issues related to broker conduct are the frequent 

subject of complaints that investors bring to the 

attention of SEC Ombudsman Tracey McNeil. 

Thus, our advocacy in this area will be led by 

Ombudsman McNeil and her staff, who expect 

to continue dialogue with FINRA during Fiscal 

Year 2021.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 15

SPECIAL REPORT 

THE IMPACT ON INVESTORS 

FROM COVID-19

The severe acute respiratory syndrome 

coronavirus 2, or SARS-CoV 2, the virus 

that causes the disease officially referred 

to as “COVID-19,”78 has had a major impact 

on investors. As the COVID-19 pandemic crisis 

unfolds, evidence of its deleterious effects on 

investors continues to accumulate. While we 

are acutely sensitive to the catastrophic toll that 

this disease has exacted on human life and the 

magnitude of suffering that the coronavirus has 

caused, the following discussion focuses specifically 

on the impact of COVID-19 on individual 

investors.79 Although a full accounting of the 

overall impact of COVID-19 on investors will 

require years of study, we attempt to provide a 

glimpse into some of the effects of this pandemic 

thus far on individual investors. 

On May 11, 2020, the Federal Reserve Bank 

of New York’s Center for Microeconomic Data 

released its April 2020 Survey of Consumer 

Expectations (the “April SCE”).80 The April 

SCE reflected “considerable deteriorations in 

households’ expectations about most economic 

outcomes.”81 More specifically, the April SCE 

showed that “Americans’ outlook for the job 

market and their finances suffered substantial 

deterioration in April as the coronavirus crisis left 

much of the U.S. economy on lockdown.”82 Among 

the April SCE’s findings were that perceptions 

about households’ current financial situations 

compared to a year ago “worsened” for the second 

consecutive month.83 The April SCE found that 

39.2 percent of survey respondents reported being 

worse off today than a year ago (compared to 

30.2 percent in March 2020).84 The April SCE 

also found survey respondents to be “increasingly 

pessimistic about their year-ago financial 

situations,” with 31.6 percent of them expecting 

their households to be “worse off financially a year 

from now,” compared to 27.8 percent in March 

2020.85 However, not all of the April SCE’s findings 

were so dour. The April SCE revealed that the 

“mean perceived probability that U.S. stock prices 

will be higher 12 months from now” increased 

from 47.7 percent in March 2020 to 51.8 percent 

in April 2020—“reaching a new series’ high.”86

This is remarkable, considering that the COVID-19 

pandemic has had a powerful impact on equity 

markets worldwide, more so than any other 

infectious disease outbreak, including the “Spanish 

Flu” of 1918.87 The effects of COVID-19 continue 

to ripple throughout the global financial markets 
16 | OFFICE OF THE INVESTOR ADVOCATE

as the disease progresses. The reasons for the 

market reaction to this viral phenomenon defy 

easy explanation. It may only be in hindsight that 

we fully comprehend the consequences of this 

pandemic on securities markets and investors. 

Meanwhile, as COVID-19 has bloomed from a 

regional medical crisis to a global pandemic, equity 

markets have yo-yoed and market volatility has 

spiked around the world.88 These developments 

may help explain why an American Association of 

Individual Investors survey of investor sentiment 

for the week of May 21, 2020 registered a 45.02 

percent “bearish” sentiment compared to 36.08 

percent last year and higher than the long-term 

average of 30.47 percent bearish.89 Yet this elevated 

bearish sentiment represents an improvement 

over the recent extreme of 52.66 percent bearish 

recorded during the week of May 7, 2020.90

A recent working paper from the National Bureau 

of Economic Research has attempted to make 

sense of the “unprecedented stock market impact” 

of COVID-19 (the NBER Paper).91 The NBER 

Paper contends that news related to COVID-19 

developments is “overwhelmingly the dominant 

driver” of large daily U.S. stock market moves since 

February 24, 2020.92 In arriving at this hypothesis, 

the NBER researchers used automated and human 

readings of newspaper articles about infectious 

disease outbreaks to analyze stock market reactions 

thereto going back 120 years to the year 1900.93

The NBER Paper finds that, by February 2020, 

in contrast to earlier periods of infectious disease 

outbreaks, COVID-19 developments began to 

dominate newspaper coverage of stock market 

volatility.94 Indeed, by March 2020, COVID-19 

developments received attention in more than 90 

percent of all newspaper discussions of market 

volatility and economic policy uncertainty.95 The 

NBER Paper recites various potential reasons for 

the outsized impact of COVID-19 on stock markets, 

including the severity of the pandemic itself, the 

rapid diffusion of information about the pandemic, 

the interconnectedness of the modern economy, 

the prevalence of long-distance travel, falling 

transportation costs, geographically expansive 

supply chains, and the face-to-face interactions 

characteristic of a service economy.96 Yet the NBER 

Paper finds these explanations incomplete. Rather, 

the authors conclude that recent stock market 

behavior “is an early and visible reflection of the 

(expected) economic damage” resulting from, 

among other things, the behavioral and policy 

reactions to the COVID-19 pandemic.97

These findings are consistent with those of the 

Commission’s Division of Economic and Risk 

Analysis (DERA). DERA’s Economic and Risk 

Outlook for the first quarter of calendar year 

2020 indicates that the actions taken to combat 

COVID-19 and their knock-on effects have led to 

“increased interest rates for lower rated debt and 

widening credit spreads that have persisted through 

mid-April.”98 In that report, DERA also observes 

that, as the “coronavirus-induced economic 

downturn unfolded, initial unemployment claims, 

often a leading economic indicator, spiked.”99

These macro trends, among other things, have 

serious ramifications for individual investors. For 

instance, an April 2020 Gallup survey (the Gallup 

Survey) found that Americans have become less 

likely to perceive stocks (including mutual funds) 

as the best long-term investment since U.S. equity 

markets plunged by more than a third in March 

of this year.100 According to Gallup, real estate 

has been Americans’ most popular investment 

choice since 2013,101 and stocks/mutual funds have 
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 17

maintained their rank as the second most favored 

investment choice after real estate.102 However, 

according to the Gallup Survey, the 21 percent of 

Americans who consider stocks/mutual funds as the 

best investment choice represents a six percentage 

point decline from last year’s level and is the 

lowest such percentage that Gallup has recorded 

since 2012.103 While high-income Americans 

have consistently viewed stocks/mutual funds as 

the best long-term investment, that number has 

declined by nine percentage points since last year, 

from 40 percent to 31 percent.104 In contrast, 

low-income American households are the least 

likely to perceive stocks/mutual funds as the most 

favorable investment choice.105 Few Americans—

about eight percent—consider bonds to be the 

best investment choice.106

So far, COVID-19 appears to have had a limited 

impact on retirement planning and retirement 

security. A recent YouGov survey of 9,675 U.S. 

adults found, among other things, that most 

respondents have made very few changes to the 

amount of money they are investing for retirement 

or how they are investing their retirement 

savings.107 According to that survey, nearly 72 

percent of respondents reported they have not 

changed anything about their retirement planning 

due to COVID-19.108 With respect to the older 

age cohort, 79 percent of those aged 55 years 

and above reported no changes whatsoever to 

their retirement planning.109 These results appear 

to be consistent with a March 2020 Employee 

Benefit Research Institute Retirement Confidence 

supplemental survey that deemed COVID-19’s 

impact on retirement security manageable.110

In the face of these cross-currents, the SEC has 

remained vigilant throughout the COVID-19 

pandemic, and it has been proactive in its mission 

to protect investors, maintain fair, orderly, 

and efficient markets, and promote capital 

formation. For example, the Commission has 

actively pursued over two dozen COVID-19-

related trading suspensions, several fraud and/or 

disclosure actions concerning coronavirus-related 

misrepresentations to investors, and established an 

internal enforcement steering committee to triage, 

manage, and monitor pandemic-related cases.111

The Commission also continues to monitor the 

functioning, integrity, and resiliency of securities 

markets with a focus on operations, systems 

integrity, and continuity plans of U.S. securities 

clearinghouses, exchanges, other market utilities, 

and key market participants. Toward that end, 

the Commission has issued guidance for broker 

dealers concerning financial responsibility and 

continues to work on appropriate implementation 

of the consolidated audit trail in light of these 

developments. In addition, the Commission has 

provided temporary enhanced flexibility for 

registered funds affected by recent market events 

to borrow funds from certain affiliates and to enter 

into certain other lending arrangements. Moreover, 

Commission staff in the Division of Corporation 

Finance and the Office of the Chief Accountant, 

respectively, have issued a significant amount 

of highly specific guidance intended to focus 

companies on key disclosure challenges to be met 

during this crisis.112
18 | OFFICE OF THE INVESTOR ADVOCATE

The SEC has further assembled an internal, 

cross-divisional “COVID-19 Market Monitoring 

Group.”113 This temporary, senior-level group is 

responsible for assisting the Commission and its 

various divisions and offices in Commission and 

staff actions and analysis related to the effects of 

COVID-19 on markets, issuers, and investors, as 

well as responding to requests for information, 

analysis and assistance from fellow regulators and 

other public sector partners.114 The COVID-19 

Market Monitoring Group works closely with 

personnel from across the agency, including staff 

in the Division of Economic and Risk Analysis, 

Division of Trading and Markets, Division of 

Investment Management, Division of Corporation 

Finance, Office of Municipal Securities, Office of 

Credit Ratings, Office of Compliance Inspections 

and Examinations, Office of International Affairs, 

Office of the Chief Accountant, and the SEC’s 

Activities-Based Monitoring Committee, among 

others.115 The group also assists in the SEC’s efforts 

to coordinate with and support the COVID-19-

related efforts of other federal financial agencies 

and other bodies, including the President’s Working 

Group on Financial Markets, the Financial Stability 

Oversight Council, and the Financial Stability 

Board, among others.116
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 19

OMBUDSMAN’S REPORT

As set forth in Exchange Act Section 4(g)(8), 

15 U.S.C. § 78d(g)(8), the Ombudsman 

is required to: (i) act as a liaison between 

the Commission and any retail investor in resolving 

problems that retail investors may have with the 

Commission or with self-regulatory organizations; 

(ii) review and make recommendations regarding 

policies and procedures to encourage persons 

to present questions to the Investor Advocate 

regarding compliance with the securities laws; 

and (iii) establish safeguards to maintain the 

confidentiality of communications between 

investors and the Ombudsman.117

The Ombudsman is also required to “submit 

a semi-annual report to the Investor Advocate 

that describes the activities and evaluates the 

effectiveness of the Ombudsman during the 

preceding year” (Ombudsman’s Report).118 The 

Ombudsman’s Report must be included in the 

semi-annual reports submitted by the Investor 

Advocate to Congress. To maintain reporting 

continuity, the Ombudsman’s Report included 

in the Investor Advocate’s June 30 Report on 

Objectives will describe the Ombudsman’s activities 

during the first six months of the current fiscal 

year and provide the Ombudsman objectives 

and outlook for the following full fiscal year. The 

Ombudsman’s Report included in the Investor 

Advocate’s December 31 Report on Activities will 

provide a look back on the Ombudsman’s activities 

during the full preceding fiscal year. 

Accordingly, this Ombudsman’s Report provides 

a look back on the Ombudsman’s activities for 

the six month period of October 1, 2019 through 

March 31, 2020 (Reporting Period) and discusses 

the Ombudsman’s objectives and outlook for Fiscal 

Year 2021, beginning October 1, 2020. 

SERVICE BY THE NUMBERS

The Ombudsman119 assists retail investors—

sometimes referred to as individual investors or 

Main Street investors—and other persons with 

concerns or complaints about the SEC or SROs 

the SEC oversees. The assistance the Ombudsman 

provides includes, but is not limited to:

§	listening to inquiries, 

concerns, complaints, 

and related issues;

§	helping persons 

explore available SEC 

options and resources;

§	clarifying certain SEC 

decisions, policies, and 

practices;

§	taking objective 

measures to 

informally resolve matters that fall outside of the 

established resolution channels and procedures 

at the SEC; and

§	acting as an alternate channel of communication 

between retail investors and the SEC.
20 | OFFICE OF THE INVESTOR ADVOCATE

In practice, individuals often seek the Ombudsman’s assistance as an initial point of contact 

to resolve their inquiries, or as a subsequent or 

ongoing point of contact when they are dissatisfied 

with the outcome, rate of progress, or resolution. 

At times, individuals request the Ombudsman’s 

assistance with things the Ombudsman is not 

permitted to do. For example, individuals may ask 

the Ombudsman to provide personal financial, 

investment, or legal advice, participate in or 

influence the outcome of an SEC investigation, 

make binding decisions or legal determinations for 

the SEC, or overturn decisions of existing dispute 

resolution or appellate bodies.

The graphic below (Figure 1) illustrates the 

standard lifecycle of what happens when 

investors or other interested persons contact the 

Ombudsman for assistance.

Figure 1: What Happens When You Contact the Ombudsman
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 21

To respond to inquiries effectively and efficiently, 

the Ombudsman tracks all inquiries received 

by, or referred to, the Ombudsman, any related 

correspondence and communications to and 

from Ombudsman staff, and the staff resources 

devoted to addressing the particular concerns. 

We maintain and monitor this information to 

identify and respond to inquiries, refer submitters 

to the appropriate resources to address their 

concerns, analyze inquiry volume and trends, and 

provide data-driven support for recommendations 

presented by the Ombudsman to the Investor 

Advocate for review and consideration.

Inquiry volume is counted in terms of matters 

and contacts. The initial contact—a new, discrete 

inquiry received by or referred to the Ombudsman 

—is the contact that creates a matter. When a 

matter is created, the Ombudsman reviews the 

facts, circumstances, and concerns, and assesses 

the staff engagement and resources that may be 

required to respond to, refer, or resolve the matter. 

Once a matter is created, it may generate 

subsequent contacts—these contacts are related 

inquiries and communications to or from the 

Ombudsman staff deriving from the matter. These 

contacts often require further attention to answer 

additional investor questions, explain or clarify 

proposed resolution options, discuss issues with 

appropriate SEC or SRO staff, or respond to 

challenging or persistent communications from 

an investor. This system of counting matters and 

contacts helps the Ombudsman quickly assess 

volume and resource issues related to each matter. 

Data Across Primary Issue Categories

During the Reporting Period, retail investors, 

industry professionals, concerned citizens, and 

other interested persons contacted the Ombudsman 

for assistance on 791 matters covering 11 primary 

issue categories (Figure 2). 

Figure 2: Matters by Primary Issue Category

October 1, 2019–March 31, 2020

Non-SEC / Other Matters (226)

Allegations of Securities Law Violations / Fraud (175)

Investment Products / Retirement Accounts (125)

SEC Questions / Complaints (92)

Atypical Matters (52)

Securities Ownership (41)

SEC Investigations / Litigation / Enforcement Actions (32)

Company Disclosures and Information (22)

FINRA Complaints / Questions / Procedures (15)

Securities Laws / Rules / Regulations / Procedures (10)

SRO Rules / Procedures (1)

28%

16%

7%

12%

0.5%

3%

5%

22%

2%

4%

0.1%
22 | OFFICE OF THE INVESTOR ADVOCATE

In addition to the 791 matters received, we fielded 

1,327 contacts covering 11 primary issue categories 

during the Reporting Period, for a total of 2,118 

contacts. The chart that follows displays the 

distribution of the 2,118 total contacts by primary 

issue category (Figure 3).

Figure 3: Contacts by Primary Issue Category

October 1, 2019–March 31, 2020

Non-SEC / Other Matters (612)

Allegations of Securities Law Violations / Fraud (482)

Investment Products / Retirement Accounts (298)

SEC Questions / Complaints (295)

Atypical Matters (111)

Securities Ownership (107)

SEC Investigations / Litigation / Enforcement Actions (94)

Company Disclosures and Information (50)

FINRA Complaints / Questions / Procedures (37)

Securities Laws / Rules / Regulations / Procedures (30)

SRO Rules / Procedures (2)

29%

14%

5%

14%

0.1%

2%

5%

23%

2%

5%

1%

How the Numbers Inform Our Efforts

The Ombudsman tracks matter and contact data to 

maintain a comprehensive view of the allocation of 

staff resources and to identify matters and contacts 

that significantly alter workflow volumes, call for 

the realignment of Ombudsman staff assignments, 

or require added staff support to manage 

effectively. The data also informs staff resource 

allocation considerations related to proposed 

program development, training, and outreach 

efforts. By tracking the distribution of matters and 

contacts across primary issue categories, the data 

helps the Ombudsman identify potential areas of 

concern or interest and enables the Ombudsman 

to act as an early warning system, as necessary, 

to alert agency leaders about the number and 

potential impact of particular issues and concerns 

raised by retail investors and others. 

SERVICE BEHIND THE NUMBERS 

While the matter and contact data quantify the 

volume and categories of inquiries the Ombudsman 

receives, the data does not capture the full value 

of the service the Ombudsman provides to the 

investing public. Among the most common 

problems and concerns investors bring to the 

Ombudsman are those where the investors are 

unfamiliar with the existing channels established to 

resolve the particular concerns they raise, unsure 

which resolution channel to use, or unable to 

get the specific outcome they want through the 

resolution channels available. In these situations, 

investors generally assume their preferred outcome 

is a viable option and expect that the Ombudsman 

is permitted to do whatever is necessary to reach 

that outcome. 
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 23

Typically, investors who are unfamiliar with 

or unsure of the available resolution channels 

will thoughtfully consider the advantages and 

disadvantages of the resolution options the 

Ombudsman presents, and will adjust their 

expectations based upon the potential outcome 

each option offers. For these investors, the 

Ombudsman serves a valuable resource function; 

however, the investor retains responsibility for 

choosing how to proceed given the resources and 

options the Ombudsman presents. On the other 

hand, investors who demand a particular outcome 

or believe that the Ombudsman is permitted to 

do whatever they request can be challenging to 

assist. The Ombudsman routinely receives requests 

from investors who want the Ombudsman to, 

for example, automatically grant them SEC 

whistleblower status and provide monetary awards, 

reveal nonpublic information relating to SEC 

investigations, stop a publicly traded company 

from taking certain corporate actions, prosecute a 

particular broker or investment adviser, overturn a 

FINRA arbitration or disciplinary decision, or fire 

specific SEC or FINRA personnel. These investors 

often resist the Ombudsman’s efforts to engage in 

a productive dialogue, and they usually conclude 

that the only acceptable outcome is the particular 

outcome they want.

The vignettes that follow provide a better sense 

of the variety of issues the Ombudsman staff 

addresses. Together, they offer a closer look at the 

time, effort, and commitment devoted to providing 

meaningful service and useful information to 

investors and other interested persons, and they 

demonstrate the value of our day-to-day work 

more effectively than data alone.

A number of retail investors contacted the Ombudsman to ask the agency to address the volatility of the 

stock market due to the COVID-19 pandemic, either through rulemaking or through enforcement actions.

Several investors urged the SEC to reinstate the SEC’s original uptick rule which prohibited short selling a stock unless the price of the stock had ticked upward.

120 Other investors suggested stopping, or at 

least pausing, all algorithmic and computer trading for an indefinite period of time. The Ombudsman team 

answered their general questions, assured them that the SEC appreciated hearing their views and concerns, 

and encouraged them to follow the agency’s rulemaking activity and COVID-19 updates on SEC.gov.

Other investors complained of account interruptions and delays relating to COVID-19. One retail investor 

raised concerns about his failed attempt to execute a trade through a large broker-dealer. He alleged that by 

the time his trade went through the following trading day, the market had dropped, and he lost a significant 

sum of money. Another retail investor complained that his broker failed to honor his request to withdraw 

funds from his account, and had, in fact, placed a 90-day hold on the account. The investor explained that he 

could not wait for 90 days because his full-time job was reduced to 10 hours per week due to COVID-19 staff 

reductions. Another investor complained that she received a letter from a hedge fund in which she invested 

a significant amount of money informing her that the fund had terminated all repurchase offers. Because 

these investors were raising concerns about their personal investments and financial matters, the Ombudsman referred them to OIEA for further assistance. All of these retail investors expressed their appreciation to 

the Ombudsman for understanding their frustrations, taking an interest in their concerns, and directing them 

to the appropriate SEC resources.
24 | OFFICE OF THE INVESTOR ADVOCATE

A retail investor who invested a considerable amount of money in a fraudulent digital currency offering 

reached out to the Ombudsman after learning that the SEC reached a settlement with the issuer and individuals accused of the fraud. The investor did not understand why she had not received a payment, given 

the sizeable monetary penalties imposed by the SEC. Upon contacting the Division of Enforcement’s (ENF)

Office of Distributions, the Ombudsman learned that the Division was still in the process of collecting funds 

from the defendants, and had not yet determined whether a Fair Fund would be established. The Ombudsman contacted the investor with an update and encouraged her to monitor the Fair Fund distributions 

information available on the SEC website.

A retail investor contacted the Ombudsman to verify the legitimacy of an SEC “Certificate of Authenticity” 

for a cryptocurrency issuer. The document contained several red flags, such as an incorrect address for the 

SEC headquarters, a seal for the “Secretary of State,” and was signed by someone who does not work at 

the SEC. The Ombudsman informed the investor that the SEC does not issue these certificates of authenticity, and discussed the other red flags with the investor. The Ombudsman further advised the investor to not 

send money or personal information in response to the solicitation, and to contact the Office of Investor 

Education and Advocacy (OIEA) for additional information and assistance. The Ombudsman also directed 

the investor to information available on the SEC website on advance fee frauds and government impersonators. In addition, the Ombudsman provided information to other SEC offices, as appropriate.

A non-U.S. investor contacted the Ombudsman to report that she had received an email from a purported 

SEC employee informing her that the SEC had detected a suspicious transaction in one of her accounts. The 

SEC employee offered to help the investor recover her funds, but told her that the SEC charges non-U.S.

investors a fee to do so. He then asked for a substantial amount of money before he could assist her. When 

the investor asked the individual for proof of his SEC employment, he provided copies of two different photo 

identification cards with his name, employee number, and title. The Ombudsman informed the investor that 

the identification cards were fake and that no such SEC employee existed. The Ombudsman also advised the 

investor that the communications with this individual had the hallmarks of an advance fee fraud, advised her 

not to send the purported SEC employee any funds, and to report the information to ENF and to OIEA. The 

investor was extremely grateful for the information and assistance. The Ombudsman also provided information to other SEC offices, as appropriate.

An investor called the Ombudsman about a letter informing him that he was the beneficiary of a settlement 

reached between the SEC, FDIC, and the Global Investment Corporation. The investor called the phone number provided in the letter and spoke to someone representing himself as an employee in the SEC’s New York 

Regional Office. The investor was instructed to post an identity bond of over $20,000 to receive his share of 

the settlement. The Ombudsman informed the investor that he appeared to be the victim of an advance fee 

fraud by someone impersonating an SEC employee, and recommended that he submit a complaint to ENF 

and contact OIEA for additional assistance. The Ombudsman also provided information to other SEC offices, 

as appropriate.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 25

A retail investor contacted the Ombudsman to ask how she could obtain paper proxy statements and 

annual reports from companies in which she owned stock. The investor also raised questions about whether 

electronic-only disclosures by issuers were allowed, and she expressed frustration about not being able to 

find this information on the SEC’s website. The Ombudsman directed the investor to guidance on the SEC’s 

website about proxies and annual reports, including how to request paper copies of documents. Because the 

investor’s questions and concerns also involved her personal investments, the Ombudsman advised her to 

contact OIEA for further information and assistance.

A state-appointed guardian for an elderly investor contacted the Ombudsman after finding several old stock 

certificates among her client’s possessions. As she gathered her client’s assets, she needed help determining 

the value of the stock certificates. Because the guardian’s question involved a personal investment, the 

Ombudsman advised her to contact OIEA for additional assistance. The Ombudsman also directed the 

guardian to information about old stock certificates and proving stock ownership available on the SEC website.

Our interactions with investors provide insight 

into the information they rely upon and the 

assistance they want when making investment 

decisions. Although the information or response 

communicated to an investor by the Ombudsman 

staff may appear simple, the threshold questions 

and considerations required to understand 

the inquiry and to identify feasible next steps, 

appropriate SEC resources, and potential policy 

implications necessitate having staff with a level of 

securities law knowledge typically gained through 

several years of prior industry experience. 

The tailored information and responses the 

Ombudsman staff provides to investors are unique 

and require a combination of securities law analysis 

and expertise, conflict resolution skills, diplomacy, 

and judgment. When our interactions with 

investors highlight a lack of information or gaps in 

understanding, we endeavor to help investors better 

understand the solutions the SEC can provide, 

including by liaising with other staff and entities as 

appropriate, so that investors are empowered and 

equipped to fully consider their options and make 

well-informed decisions. 

STREAMLINED COMMUNICATIONS 

WITH RETAIL INVESTORS

The Ombudsman Matter Management System 

(OMMS) is an electronic platform for receiving 

inquiries, as well as tracking and analyzing matter 

and contact information, while ensuring all 

necessary data management, confidentiality, and 

reporting requirements are met. The OMMS Form, 

a web-based, mobile friendly form permitting the 

submission of inquiries, complaints, and documents 

directly to the Ombudsman, guides the submitter 

through a series of questions specifically tailored 

to elicit information concerning matters within the 

scope of the Ombudsman’s function. In addition, 

the OMMS Form allows submitters to easily 

upload and submit related documents for staff 

review. For any persons who do not wish, or are 

unable, to use the OMMS Form, they may still 

contact the Ombudsman by email, telephone, fax, 

and mail.

When an OMMS Form is submitted, OMMS 

automatically creates a matter record. For 

each inquiry received by telephone, email, or 

other means outside of the OMMS Form, the 
26 | OFFICE OF THE INVESTOR ADVOCATE

Ombudsman manually creates an OMMS 

matter record. Once an OMMS matter record 

is created, the Ombudsman and staff can review 

the matter details, track all related contacts and 

correspondence, update matter comments, and 

communicate with the investor via the OMMS 

platform. OMMS also allows the Ombudsman and 

staff to search and analyze matters and contacts 

by submitter name, primary issue, fiscal year, and 

a number of other categories, and review data 

and customize specific reports when a more detail 

review is needed. 

As a result of our continuing efforts to use the 

OMMS platform to enhance and streamline 

our communications with retail investors, 353 

new matters were submitted via the OMMS 

Form during this six month Reporting Period, 

representing 44.6 percent of the 791 new matters 

received. During FY 2019, 791 new matters were 

submitted via the OMMS Form, representing 53.4 

percent of the 1,480 new matters received. During 

FY 2018, the first full fiscal year the OMMS Form 

was available to the public, 164 new matters were 

submitted via the OMMS Form, representing 36.5 

percent of the 449 new matters received. 

During this Reporting Period, the Ombudsman 

worked closely with Office of Information 

Technology (OIT) and the technology contractor to 

improve the back-office functionality of OMMS. 

Several enhancements—including help text and 

quick reference language, email response template 

formatting, active matter viewing and saving, and 

secondary issue category options—were discussed 

and preliminarily tested during the Reporting 

Period. Once finalized, these enhancements will 

assist the Ombudsman team with responding to 

investors, tracking additional reporting data, and 

generating specialized dashboards and reports. 

For the remainder of Fiscal Year 2020, the 

Ombudsman will continue to participate in 

standing weekly meetings and special working 

group sessions with OIT and the technology 

contractor to identify additional enhancements 

to refine the back-office experience for the 

Ombudsman team. In addition, to the extent it 

aids the understanding of the data presented, 

we anticipate reporting some secondary issue 

category data in future Ombudsman Reports. For 

the public-facing OMMS Form, the Ombudsman 

will continue to encourage persons to submit their 

inquiries via the OMMS Form, closely monitor 

any questions and suggestions relating to the user 

experience, and work with OIT, the technology 

contractor, and Office of Public Affairs as necessary 

to enhance the OMMS user experience and the 

Ombudsman-related information and resources 

available to the public.

STANDARDS OF PRACTICE

Any retail investor with an issue or concern related 

to the SEC or an SRO subject to SEC oversight 

may contact the Ombudsman. The Ombudsman 

is available to identify existing SEC options and 

resources to address issues or concerns, and to 

explore informal, objective steps to address issues 

or concerns that may fall outside of the agency’s 

existing inquiry and complaint processes. Similar 

to ombudsmen at other federal financial regulatory 

agencies, the Ombudsman follows three core 

standards of practice:
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 27

CONFIDENTIALITY IMPARTIALITY INDEPENDENCE

The Ombudsman has established 

safeguards to protect confidentiality, 

including the use of OMMS, a separate 

email address, dedicated telephone 

and fax lines, and secure file storage. 

The Ombudsman generally treats 

matters as confidential, and takes 

reasonable steps to maintain the 

confidentiality of communications. 

The Ombudsman also attempts 

to address matters without 

sharing information outside of the 

Ombudsman staff, unless given 

permission to do so. However, the 

Ombudsman may need to contact 

other SEC divisions or offices, SROs, 

entities, and/or individuals and share 

information without permission under 

certain circumstances including, but 

not limited to: a threat of imminent 

risk or serious harm; assertions, 

complaints, or information relating 

to violations of the securities laws; 

allegations of government fraud, 

waste, or abuse; or if otherwise 

required by law.

The Ombudsman does 

not represent or act as an 

advocate for any individual 

or entity, and does not take 

sides on any issues. The 

Ombudsman maintains a 

neutral position, considers 

the interests and concerns 

of all involved parties, 

and works to resolve 

questions and complaints 

by clarifying issues and 

procedures, facilitating 

discussions, and identifying 

options and resources.

By statute, the Ombudsman 

reports directly to the 

Investor Advocate, who 

reports directly to the 

Chairman of the SEC. 

However, the Office of the 

Investor Advocate and the 

Ombudsman are designed 

to remain somewhat 

independent from the 

rest of the SEC. Through 

the Congressional reports 

filed every six months by 

the Investor Advocate, the 

Ombudsman reports directly 

to Congress without any 

prior review or comment 

by the Commission or other 

Commission staff.

The Ombudsman’s Challenge

The mission statement of the SEC is to “protect 

investors, maintain fair, orderly, and efficient 

markets, and facilitate capital formation.”121 At 

the center of many complaints the Ombudsman 

receives is a misunderstanding about the SEC’s 

relationship and obligations to individual investors 

because of the “protect investors” language in the 

mission statement. Investors frequently assume the 

purpose for SEC investigations and enforcement 

actions is to address their specific allegations or 

protect their specific, individual interests. Investors 

regularly express confusion and disappointment 

when they are informed that the SEC does not 

advocate for a particular investor or for a particular 

investor’s specific interests or needs. While the 

SEC’s enforcement actions may at times align with 

the personal interests of harmed investors, the SEC 

does not pursue investigations and enforcement 

actions solely to represent a specific investor’s 

particular legal interests or to recover money a 

particular investor may have lost. Rather, the SEC 

advocates for—or supports—the collective interests 

of all investors and the public by maintaining fair, 

orderly, and efficient capital markets through the 

enforcement of the federal securities laws. 
28 | OFFICE OF THE INVESTOR ADVOCATE

A primary question we encounter is, then, what can 

the Ombudsman do for investors who have been 

harmed by violations of the federal securities laws? 

In appropriate circumstances, the Ombudsman 

may be able to present options to investors or 

foster communications between the investor and 

SEC or SRO staff. However, the Ombudsman is 

not authorized to do many things that investors 

request, including:

§	deciding the facts in a dispute that the investor 

has with the Commission or an SRO, or in a 

dispute before an SRO, such as an arbitration 

or mediation;

§	intervening on behalf of, or representing the 

interest of, an investor in a formal dispute or 

investigation process;

§	providing advice on how the federal securities 

laws may impact their particular investments 

or legal options; or

§	changing formal outcomes, including decisions 

about whether to investigate an allegation of 

wrongdoing, settle an enforcement action, or 

create a Fair Fund.

With these limitations in mind, the Ombudsman 

routinely explains to investors that they have the 

ability to protect their interests and preserve their 

legal rights in ways that the Ombudsman cannot. 

For example, an investor can file an arbitration 

or mediation complaint with FINRA to address 

a broker dispute, or hire private legal counsel to 

advise the investor on the best ways to protect the 

investor’s rights or reach a particular outcome. 

Investors who do not have the means to hire 

legal counsel may want to request representation 

through no-cost legal clinics sponsored by various 

law schools. Although the Ombudsman staff 

cannot represent the interests of investors in private 

disputes, we do serve these investors by providing 

information that will assist them in making better 

informed choices for themselves. 

Assisting Investors through Advocacy

Even when we cannot help investors achieve the 

specific results they desire, the concerns we hear 

from investors help to shape the policy agenda of 

the Office of the Investor Advocate. We also engage 

with those who represent investors, including law 

school investor advocacy clinics, to gain a deeper 

understanding of potential legal and structural 

barriers encountered by investors. 

To retail investors, FINRA is perhaps the most 

well-known SRO under SEC oversight. FINRA 

operates BrokerCheck122 and a dispute resolution 

forum,123 both of which are commonly used by 

retail investors. As discussed in prior reports, the 

Ombudsman closely follows FINRA’s rulemaking 

and dispute resolution forum activities that may 

have a direct and significant impact on retail 

investors. We also look for ways to improve SEC 

or SRO processes and regulations for the collective 

benefit of investors, and we advocate for those 

types of reforms. Selected areas of interest and 

importance to retail investors are discussed below. 

AREAS OF INTEREST AND 

IMPORTANCE TO RETAIL INVESTORS

Proposed Rule Change to Amend 

Broker Arbitration Filing Fees

During the Reporting Period, FINRA submitted 

to the SEC a proposed rule change124 to the 

FINRA rules governing fees paid by brokers 

who request expungement of customer dispute 

and disciplinary information from the Central 

Registration Depository (CRD),125 which is the 

source for information available in BrokerCheck. 

The proposed amendment seeks to close a 

loophole in the existing rules that allows brokers 

seeking expungement to pay minimal fees for their 

expungement requests.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 29

The BrokerCheck research tool that gathers broker 

information from CRD provides “a snapshot of a 

broker’s employment history, regulatory actions, 

and investment-related licensing information, 

arbitrations, and complaints.”126 The SEC and 

FINRA encourage retail investors to rely on this 

publicly available information when choosing the 

professionals on whom they rely for investment 

advice. Under certain conditions, however, a 

broker may petition an arbitration panel to remove 

or “expunge” negative information from CRD, 

including customer disputes and disciplinary 

records. If such information is removed from 

CRD, then that information will not appear in 

BrokerCheck.127On the whole, the expungement 

process seeks to balance the benefits of publicly 

disclosing complaints made against a broker while 

also protecting the broker from the publication 

of false allegations.128 However, retail investors 

conducting research on BrokerCheck are not made 

aware of negative information once it is expunged 

and, as a result, may select a broker with a history 

of complaints and disputes that has an ostensibly 

good record on BrokerCheck.

After an arbitration is complete, a broker may 

request the expungement of certain information 

from his CRD record. This petition for the removal 

of negative information is known as a straight-in 

request.129 When a broker takes this route, he or 

she pays the required filing fees and the member 

firm or person must pay process fees and possibly 

a surcharge.130 The current rules require straight-in 

requests for expungement to be decided by a panel 

of three arbitrators, unless the parties agree, in 

writing, to a single arbitrator.131

However, under the existing rules a broker can 

obtain reduced fees and have his or her request 

heard by a single arbitrator simply by adding a 

small monetary claim (typically one dollar) against 

the member firm. This is because non-monetary 

claims must be considered by a three arbitrator 

panel, whereas monetary claims for less than 

$50,000 are considered by a single arbitrator.132

Not only does this make it less expensive for 

associated persons to seek expungement, but it also 

leaves the decision to remove negative information 

from the associated person’s record to a single 

arbitrator. FINRA’s proposed rule seeks to close 

the loophole by removing the provision that allows 

the associated person to add a nominal claim to 

achieve reduced fees. 

Some commenters133 pointed out that the proposed 

process would still deprive the investing public of 

the insights that two additional arbitrators may 

have brought to the expungement process and 

urged FINRA to go farther in amending the rule 

to require a three arbitrator panel. Others urged 

FINRA to revise the amended rule to require 

unanimity in a three arbitrator panel deciding 

on expungement.134 In response to the public 

comments, FINRA noted that while it “believes 

that most expungement requests, particularly 

straight-in requests, should be decided by a threeperson panel,” it had decided not to revise this 

proposed rule.135 FINRA further noted that it is 

in the process of developing separate changes to 

the expungement framework, including expanded 

guidance and establishing a roster of arbitrators 

with additional training to hear straight-in requests 

for expungement.136

After reviewing the proposal, the public 

comments received, and FINRA’s response 

to those comments, the SEC approved the 

proposed rule on May 26, 2020.137
30 | OFFICE OF THE INVESTOR ADVOCATE

Proposed Rule to Address Arbitrations 

against Inactive Member Firms or 

Associated Persons

On November 5, 2019, FINRA submitted for SEC 

review a proposed rule138 to amend portions of 

the Code of Arbitration Procedure for Customer 

Disputes to give retail investors expanded options 

to withdraw an arbitration claim if a member 

firm or associated person becomes inactive before 

the claim is filed or during the pendency of an 

arbitration. The proposal also seeks to address the 

ongoing problem of arbitration awards to retail 

investors that go unpaid by inactive members.139

Under the provisions of the proposed rule, a retail 

investor would have the option to file an arbitration 

claim in federal court instead of with FINRA. This 

may be an attractive option to a retail investor 

because FINRA loses its power to enforce the 

arbitration award if the associated person becomes 

inactive and leaves the industry, thereby forcing the 

retail investor, at an additional expense, to seek a 

federal court order to enforce the arbitration award. 

The proposed rule puts the choice of initial forum in 

the hands of the retail investor. Under the proposed 

rule, FINRA will now advise the retail investor of 

the inactive party’s “status change” and the retail 

investor will have 60 days to decide whether or not 

to withdraw the arbitration claim and file an action 

in federal court.140

Four of the five comment letters submitted to 

the SEC141 were supportive of the proposed rule; 

however, three of the commenters felt that the rule 

did not go far enough to address the problem of 

unpaid arbitration awards.142 The Public Investors 

Advocate Bar Association (PIABA) noted that 

“the proposed rule changes . . . are insufficient 

to remedy the longstanding problem of unpaid 

arbitration awards, which disproportionately 

involve customer claims against inactive FINRA 

members and associated persons.”143 PIABA further 

urged FINRA to establish a national recovery 

pool for unpaid arbitration awards or to require 

insurance coverage for customer claims. In response 

to the comments submitted to the SEC, FINRA 

submitted its own comment letter addressing the 

concerns raised by the five commenters. In response 

to PIABA’s criticism, FINRA explained that the 

proposed rule “is intended to expand the options 

available to a customer when dealing with those 

members or associated persons that are inactive 

at the time a claim is filed or become inactive 

during a pending arbitration. The proposed rule 

change is one of the ways FINRA is proceeding to 

implement additional steps to strengthen its rules 

relating to the important but complex topic of 

customer recovery.”144

After reviewing the proposed rule and comments 

received, the SEC acknowledged the concerns 

raised by the commenters that the proposed 

rule does not go far enough to address unpaid 

arbitration awards and, like FINRA, commented 

that “the proposal represents only one step in 

the ongoing process of addressing these issues 

and that FINRA continues to evaluate further 

action.”145 The proposed rule was approved by 

the SEC on February 25, 2020, thus expanding 

the options available to retail investors in FINRA 

arbitration proceedings.146
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 31

Proposed Amendments to FINRA 

Membership Application Program Rules

On December 20, 2019, FINRA submitted for 

SEC review proposed amendments to FINRA’s 

Membership Application Program (MAP) rules 

to address the issues of pending arbitration claims 

and unpaid arbitration awards or settlements.147

The proposed rule would require firms applying 

for FINRA membership with pending arbitration 

claims against them, or any of their brokers, to 

demonstrate how the firms would pay any claims 

that result in awards or settlements, as well as 

how they would supervise these brokers. The 

proposed rule also requires existing member firms 

seeking to change their ownership or business 

operations to address pending arbitration claims 

or unpaid arbitration awards or settlements before 

FINRA will approve their proposed changes. 

These amendments will benefit retail investors 

because they address the longstanding problem of 

unpaid arbitration awards by putting the burden 

on applicant firms to demonstrate that they are 

capable of paying any arbitration claims that 

result in awards, as well as any unpaid awards or 

settlements of their brokers.148 The proposed rule 

will also prevent member firms with substantial 

pending arbitration claims from avoiding payment 

by shifting assets to another firm and closing down.

Under current FINRA rules, if an applicant for 

new membership or any of its brokers is subject 

to certain regulatory events, there is a rebuttable 

presumption that the application should be 

denied.149 The proposed rule adds “pending 

arbitration claims” to this list of regulatory 

events, which requires applicants to show that 

they can satisfy any unpaid arbitration awards 

and to address supervision of brokers with 

pending arbitration claims, in order to overcome 

the presumption that their application should be 

denied.150 Perhaps these firms will be reluctant 

to hire brokers with pending arbitration claims 

in light of these added financial and supervisory 

requirements.

The proposed rule also requires a member firm to 

submit a request for a materiality consultation151

before entering into any agreement to transfer or 

acquire any line of business when there is a firm or 

broker on either side of the proposed transaction 

with a pending arbitration claim or unpaid 

arbitration award.152 This change is intended to 

prevent firms with pending arbitration claims that 

result in awards or settlements to avoid paying the 

awards or settlements by transferring their assets to 

another firm and closing down.

The proposed rule was published for comment in 

the Federal Register on December 30, 2019, and 

the Commission received two public comment 

letters in January 2020.153 Although both 

commenters generally supported the proposed rule 

changes, they each commented that the proposed 

rule did not go far enough to address the ongoing 

problem of unpaid arbitration awards.154 FINRA 

responded to the comment letters on January 31, 

2020,155 acknowledging the comments but stating 

that “this particular rule filing is only one of the 

ways it is proceeding to implement additional steps 

to strengthen its rules on this topic.”156

The proposed rule was approved by the SEC 

on March 26, 2020.157 In its approval, however, 

the SEC acknowledged the concerns raised by 

the commenters about the potential for action 

to address unpaid claims arising from outside 

the FINRA arbitration process, and agreed with 

FINRA’s assessment that this rule is just one step in 

the overall process of addressing these issues.158
32 | OFFICE OF THE INVESTOR ADVOCATE

Advance Fee Fraud

As discussed previously by the Ombudsman,159

advance fee fraud continues to be a very real threat 

to retail investors. Advance fee fraud generally 

involves a request to a retail investor for personal 

information and a fee to be paid up front prior to 

receiving any of the promised reward (for example, 

proceeds from a class action lawsuit, payment 

for the purchase of securities, or financing for a 

project). The advance payment may be described 

as a fee, tax, commission, or incidental expense 

that will be repaid or refunded to the investor 

later. After the investor pays the advance fee, the 

fraudster typically cuts off contact, and the investor 

never recovers the fees paid in advance. 

These types of frauds tend to be successful 

because the perpetrators may pose as legitimate 

broker-dealers or regulators to gain the trust 

of the investor or to lend the appearance of 

legitimacy. At times, advance fee frauds are 

perpetrated by individuals posing as SEC staff or 

other government officials. Non-U.S. investors are 

often targeted, as they may be unfamiliar with the 

names of legitimate U.S. regulators, such as the 

SEC or state securities regulators. 

As described above, during the Reporting Period, 

the Ombudsman was contacted by numerous 

retail investors with concerns and suspicions 

about communications they received from persons 

purporting to be legitimate broker-dealers and, 

in some instances, SEC employees. Some of the 

perpetrators went to great lengths to gain the 

trust of investors—one went so far as to provide 

copies of fraudulent SEC photo identification 

cards. It is a testament to the SEC’s investor alerts 

that the majority of these individuals had enough 

doubt about the communications to contact the 

Ombudsman for assistance in determining the 

legitimacy of the offers and individuals involved. 

In each instance, the Ombudsman advised the 

investor that the communication was likely a scam, 

recommended that the investor not respond to the 

communications, and provided additional SEC 

information and resources to help them recognize 

and avoid these types of scams in the future. In 

addition, the Ombudsman directed the investors 

to report the alleged fraud to ENF, and to contact 

OIEA with any further questions about their 

personal investments. Depending on the facts and 

circumstances of each case, the Ombudsman also 

reported advance fee fraud matters and complaints 

involving persons purporting to be SEC staff to 

other SEC divisions and offices as appropriate for 

further handling.

Retail Investor Concerns Relating 

to the COVID-19 Pandemic

The COVID-19 pandemic has had an 

unprecedented impact on financial markets, and 

the SEC has taken numerous steps to provide 

ongoing information to retail investors. The banner 

on the SEC.gov homepage—“SEC Response to 

COVID-19”—connects to summary information, 

up-to-date guidance, and investor alerts relating to 

the work of the agency during the pandemic.160

Both during and after the Reporting Period, the 

Ombudsman received numerous submissions 

from investors relating to COVID-19. Many of 

these investors expressed their frustration with 

the extreme volatility of the market, and urged 

the SEC to take action to reduce or eliminate 

short-selling. Others reported specific problems 

with getting trades executed primarily due to 

breakdowns in technology, or the inability to 

get anyone at their brokers to respond to their 

requests for assistance, which they felt exacerbated 

their financial losses. Some investors just wanted 

to vent their frustrations, and several expressed 

their appreciation to the Ombudsman for taking 

the time to listen and for directing them to the 

appropriate resources.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 33

ONGOING OUTREACH TO INVESTOR 

ADVOCACY CLINICS

The OIAD Law School Clinic 

Outreach Program

The Ombudsman, working directly with the 

Investor Advocate and an OIAD counsel, 

launched the OIAD Law School Clinic Outreach 

Program in October 2016.161 The OIAD Law 

School Clinic Outreach Program was designed to 

support OIAD’s statutory requirements and help 

identify areas in which retail investors may benefit 

from regulatory and policy changes. Through 

their legal representation of retail investors and 

their community-based advocacy work, law 

school investor advocacy clinics162 examine 

issues confronting retail investors from a vantage 

point not available to SEC staff. Given the 

small size of our office, establishing an outreach 

program with the investor advocacy clinics was a 

resourceful and impactful method to complement 

our statutory mandate and core functions, hear 

from retail investors across the country through 

the clinics that represent them, and focus our 

attention on policy issues that may significantly 

impact their investing experience. 

As background, since 1997, when then SEC 

Chairman Levitt announced the creation of two 

pilot law school investor advocacy clinics to help 

retail investors with small claims obtain quality 

legal representation, investor advocacy clinics have 

formally represented over 500 retail investors, 

recovered more than $5 million on behalf of retail 

investors, and submitted more than one hundred 

comment letters to the Commission, FINRA, and 

other regulators and industry groups on policy 

issues of importance to retail investors. The clinics 

have also provided interviewing and counseling 

services to more than 1,000 investors, and engaged 

many more investors through their communitybased presentations, informational materials, and 

web-based content.163

The Law School Clinic Outreach Program allows 

OIAD to interact directly with the clinics, engage 

in meaningful policy discussions, and gain a 

better understanding of their views on suggested 

regulatory changes and policy initiatives. Our 

engagement with the law school clinics also 

provides an excellent opportunity to inform law 

students interested in securities law and investor 

protection issues about internships, externships, 

and career opportunities at the SEC. Moreover, our 

outreach program aligns with the SEC’s diversity 

and inclusion efforts, creates an additional path to 

attract a diverse pool of potential applicants, and 

demonstrates the SEC’s commitment to a diverse 

and inclusive workplace at all levels of the agency.

From the launch of the OIAD Law School Clinic 

Outreach Program in October 2016 through 

January 2018, the Ombudsman and an OIAD 

counsel completed initial in-person meetings 

with the 14 of the 17 clinics that were in active 

operation and representing clients.164 A timeline 

highlighting our formal outreach and engagement 

efforts from the start of the OIAD Law School 

Clinic Outreach Program in October 2016 through 

June 2019, and a discussion of our postponed 2020 

Investor Advocacy Clinic Summit, are below.
34 | OFFICE OF THE INVESTOR ADVOCATE

OIAD LAW SCHOOL CLINIC OUTREACH PROGRAM AND 

ENGAGEMENT TIMELINE

2016

OCTOBER

Ombudsman and OIAD Counsel met with clinic 

directors and law students during in-person visits 

to the Pace University School of Law Investor 

Rights Clinic and the University of Miami School 

of Law Investor Rights Clinic.

2017

JUNE

Ombudsman and OIAD Counsel attended the 

Securities Arbitration Clinic Directors Annual 

Roundtable hosted by the Fordham University 

School of Law and its Securities Litigation and 

Arbitration Clinic. The roundtable provides an 

annual opportunity for the clinic directors to meet 

in person to discuss problematic products and 

practices affecting retail investors, arbitration 

updates, and client representation trends. The OIAD 

Law School Clinic Outreach Program was formally 

rolled out to all of the clinics at the roundtable.

AUGUST

Ombudsman met with the director of the Seton 

Hall University School of Law Investor Advocacy 

Project at SEC headquarters.

AUGUST AND SEPTEMBER

Ombudsman and OIAD Counsel met with 

clinic directors, law students, and law school 

administrators during in-person visits to the 

following clinics: 

§	New York Law School Securities Arbitration Clinic

§	St. John’s University School of Law Securities 

Arbitration Clinic 

§	University of Pittsburgh School of Law Securities 

Arbitration Clinic

§	Northwestern University School of Law Investor 

Protection Clinic

§	Georgia State University College of Law 

Investor Advocacy Clinic

§	Howard University School of Law Investor 

Justice and Education Clinic

§	Syracuse University College of Law Securities 

Arbitration and Consumer Law Clinic

§	Cornell University School of Law Securities 

Law Clinic

§	Benjamin N. Cardozo School of Law Securities 

Arbitration Clinic

OCTOBER

Ombudsman and OIAD hosted a group of 17 

clinic directors and law students from the Seton 

Hall University, Georgia State University, Howard 

University, St. John’s University, and the University 

of Pittsburgh investor advocacy clinics at the public 

meeting of the Investor Advisory Committee at 

SEC headquarters.

§	During the IAC meeting, the Seton Hall University

clinic director, the Georgia State University clinic 

director, and a Georgia State University law student

presented formal remarks to the IAC and provided 

an overview of their advocacy efforts behalf of 

retail investors and the ongoing funding challenges 

that force investor advocacy clinics to turn away 

clients and cease operations.

165

§	The Ombudsman also arranged for the clinic 

directors and law students to meet and have 

informal discussions with Chairman Clayton, 

Commissioner Stein, Commissioner Piwowar, 

and senior officers from the Division of Investment 

Management and the Division of Enforcement 

during this visit.

Ombudsman and OIAD Counsel attended an 

Investor Education Roadshow community outreach 

seminar in Bergen County, New Jersey hosted by 

the Seton Hall University School of Law Investor 

Advocacy Project.

Ombudsman and OIAD Counsel met with the clinic 

director and law students during an in-person visit 

to the University of Miami School of Law Investor 

Rights Clinic.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 35

2018

JANUARY

Ombudsman and OIAD Counsel met with the clinic 

director and law students during an in-person visit 

to the newly established University of Nevada Las 

Vegas School of Law Investor Protection Clinic.

FEBRUARY

Ombudsman participated as a Career Paths 

Program panelist for the St. John’s University 

School of Law Clinical Legal Education Program.

MARCH

Ombudsman and OIAD hosted 35 clinic directors 

and law students from the Cardozo Law, Northwestern University, Pace University, University 

of Miami, St. John’s University, University of 

Pittsburgh, and University of Nevada Las Vegas 

investor advocacy clinics at the public meeting 

of the Investor Advisory Committee at SEC 

headquarters.

§	During the meeting, the IAC voted to approve 

a formal recommendation to the Commission, 

“Financial Support for Law School Clinics that 

Support Investors,” highlighting the important 

investor protection services the clinics provide 

to retail investors with small claim amounts, the 

declining number of clinics, and their ongoing 

funding challenges.

166

§	The Ombudsman also arranged for the clinic 

directors and law students to meet and have 

informal discussions with Chairman Clayton, 

Commissioner Stein, Commissioner Piwowar, 

and Commissioner Peirce during this visit.

JUNE

Georgia State University College of Law, with 

significant involvement from its Investor Advocacy 

Clinic, hosted the first SEC Town Hall attended by 

the full five-member Commission outside of the 

Washington, DC area in the SEC’s history.

167 Among 

the many locations, colleges, and venues considered 

for this historic town hall, Georgia State University 

College of Law was suggested by the Ombudsman 

as an option for consideration.

Ombudsman attended the Securities Arbitration 

Clinic Directors Annual Roundtable hosted by the 

Fordham University School of Law and its Securities 

Litigation and Arbitration Clinic.

NOVEMBER

Ombudsman visited the Georgia State University 

College of Law Investor Advocacy Clinic and 

attended its Legal Analytics and Innovation 

Initiative presentation on FINRA arbitration research.

2019

APRIL

Ombudsman and OIAD hosted the first SEC Investor 

Advocacy Clinic Summit at SEC headquarters.

168

§	59 clinic directors and law students from 10 law 

school investor advocacy clinics—Cardozo School 

of Law, Cornell University, Fordham University, 

Georgia State University, Howard University, 

New York Law School, Pace University, St. John’s 

University, University of Miami, and the University 

of Pittsburgh—participated in the Summit.

§	In addition to the Investor Advocate and 

Ombudsman, Summit speakers included SEC 

Commissioners Jackson and Roisman; Gerri 

Walsh, Senior Vice President of Investor Education, 

FINRA; Rick Berry, Executive Vice President and 

Director of Dispute Resolution, FINRA; Joseph 

Brady, Executive Director, NASAA; and Charu 

Chandrasekhar, SEC Assistant Regional Director 

and Chief of the SEC Retail Strategy Task Force.

JUNE

Ombudsman attended the Securities Arbitration 

Clinic Directors Annual Roundtable hosted by the 

Fordham University School of Law and its Securities 

Litigation and Arbitration Clinic.
36 | OFFICE OF THE INVESTOR ADVOCATE

The 2020 SEC Investor 

Advocacy Clinic Summit

During the Reporting Period, the Ombudsman 

team prepared to host the second SEC Investor 

Advocacy Clinic Summit (Summit), a follow up 

to the successful inaugural Summit held at SEC 

headquarters on April 4, 2019.169 While the 

investor advocacy clinic directors periodically 

convene, and some clinic directors and students 

visit the SEC from time to time, the Ombudsman 

developed the Summit to provide an opportunity 

for the clinic students and directors to gather in 

person to discuss issues of importance to main 

street investors with each other and with senior 

leaders from the SEC, SROs, and industry groups.

The Ombudsman’s staff first contacted the investor 

advocacy clinic directors in November 2019 to 

request feedback on their interest and availability to 

attend another in-person Summit, the anticipated 

numbers of students attending, and discussions and 

presentation topics. After consulting with the clinic 

directors and considering the academic calendars 

for the various law schools, March 26, 2020 was 

determined to be the best date for the Summit 

that allowed most clinics to attend. The Summit 

grew to include nearly 100 expected participants, 

including 9 investor advocacy clinic directors and 

more than 60 law students representing 9 of the 12 

active investor advocacy clinics—Cardozo School 

of Law, Cornell University, Fordham University, 

Howard University, New York Law School, 

Pace University, St. John’s University, University 

of Nevada Las Vegas, and the University of 

Pittsburgh.170 Confirmed participants and speakers 

included Chairman Clayton, Commissioner Peirce, 

the Investor Advocate, the Ombudsman, and senior 

staff from across the agency. Senior leaders 

from industry and advocacy groups such 

as FINRA, NASAA, and PIABA, were also 

scheduled to participate. To round out the 

program, former clinic clients also agreed to 

participate and share their experiences as investor 

fraud victims and offer their perspectives on 

the benefits of working with investor advocacy 

clinics to recover their losses. Preparation for 

the Summit was in the final stages during the 

first week of March 2020 when unfortunately, 

due to information relating to the spread of the 

COVID-19 virus and out of an abundance of 

caution, the Summit was postponed.171

The Ombudsman will reach out to the clinic 

directors, speakers, and participants over the 

next several months to gauge the feasibility of 

rescheduling the Summit as a live or virtual 

event later in 2020 or in 2021. We will provide 

further Summit related updates in the upcoming 

Ombudsman’s Report included in the Report on 

Activities for Fiscal Year 2020.

OBJECTIVES AND OUTLOOK 

As Ombudsman, I bridge a unique gap. Among 

my statutory duties, I am required to both field 

complaints directly from retail investors about 

the SEC or the SROs we oversee, and serve as a 

liaison to help resolve those complaints. Analyzing 

those complaints and relaying pertinent, 

actionable information to SEC staff tasked with 

addressing regulatory concerns on a regular 

basis is an added value to both the SEC and the 

investing public, the importance of which grows 

more apparent with the increasing number and 

complexity of complaints I receive. 
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 37

To appropriately focus my existing staff resources, 

I will continue to track detailed matter and contact 

information relating to investor complaints. As 

I begin to explore the feasibility and usefulness 

of tracking secondary category data to identify 

additional areas of concern within certain primary 

issue categories, I will closely review the data to 

determine what secondary category information 

may be useful to share with certain SEC divisions 

and offices, and what information may be useful 

to present in future Ombudsman’s Reports. 

Furthermore, the approval to hire one additional 

attorney-adviser during Fiscal Year 2020 is 

appreciated, and will help me address the growing 

complexity and volume of investor complaints and 

collaborate with my colleagues across the agency 

to ensure that the concerns of Main Street investors 

are considered throughout the regulatory process. 

I will continue to lead our investor advocacy clinic 

outreach efforts, including strengthening our ties 

with the existing clinics and serving as a resource to 

those exploring ways to establish and fund clinics. 

As discussed in this Report, bringing the investor 

advocacy clinics together for an in-person Summit 

in April 2019 was an extraordinary opportunity 

for SEC staff to hear directly from the clinics, and 

for the clinics to establish and strengthen their 

relationships with each other as they work to 

address retail investor concerns. It was unfortunate, 

but necessary, to postpone the second Summit 

scheduled for March 2020; however, I look 

forward to meeting with all of the law school 

investor advocacy clinic directors later this summer, 

where we may discuss options for convening the 

next investor advocacy clinic summit so that clinic 

directors and law students can once again share 

their perspectives on retail investor protection with 

each other and with SEC staff. 

Moreover, I look forward to hearing the clinic 

directors’ perspectives on the critical need to 

increase funding for new and existing clinics. 

Despite ongoing funding and operational 

challenges, investor advocacy clinics continue to 

provide critical services to Main Street investors 

with small dollar amount claims who otherwise 

would have no practical options for legal 

representation. I remain supportive of any efforts to 

increase funding to existing clinics and to provide 

funding to establish new clinics. As noted in my 

prior reports, and as covered in the March 2018 

IAC formal recommendation to the Commission, 

the small number of clinics in operation is not 

enough to represent the retail investors who need 

clinic services the most. 

Finally, the remainder of Fiscal Year 2020 should 

provide several opportunities to share my work and 

the work of the SEC with industry participants and 

the broader ombudsman and dispute resolution 

communities in ways that may directly benefit 

retail investors. I will also continue to explore ways 

to best use outreach opportunities, industry and 

investor events, and technology to better connect 

with investors and industry participants. 

It is a privilege to serve as Ombudsman, and I look 

forward to providing additional updates on our 

activities and progress in these areas in my next 

Ombudsman’s Report. 

Tracey L. McNeil

Ombudsman
38 | OFFICE OF THE INVESTOR ADVOCATE

SUMMARY OF 

INVESTOR ADVISORY COMMITTEE 

RECOMMENDATIONS AND 

SEC RESPONSES

Congress established the Investor Advisory 

Committee (IAC) to advise and consult 

with the Commission on regulatory 

priorities, initiatives to protect investor interests, 

initiatives to promote investor confidence and 

the integrity of the securities marketplace, and 

other issues.172 The Committee is composed of 

the Investor Advocate, a representative of state 

securities commissions, a representative of the 

interests of senior citizens, and not fewer than 

10 or more than 20 members appointed by the 

Commission to represent the interests of various 

types of individual and institutional investors.173

Exchange Act Section 39 authorizes the Committee 

to submit findings and recommendations for 

review and consideration by the Commission.174

The statute also requires the SEC “promptly” to 

issue a public statement assessing each finding or 

recommendation of the Committee and disclosing 

the action, if any, the Commission intends to take 

with respect to the finding or recommendation.175

While the Commission must respond to the IAC’s 

recommendations, it is under no obligation to agree 

with or act upon the recommendations.176

In each of our reports to Congress, the Office of 

the Investor Advocate summarizes the IAC recommendations and the SEC’s responses to them.177

We continue to report on recommendations until 

we believe the Commission’s response is final. 

For summaries of Commission activities related 

to previous IAC recommendations, please see our 

earlier reports to Congress. 

The Commission may be pursuing initiatives that 

are responsive to IAC recommendations but have 

not yet been made public. Commission staff—

including the staff of this Office—are prohibited 

from disclosing nonpublic information.178

Therefore, any such initiatives are not reflected in 

this Report.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 39

Topic Date IAC Recommendation SEC Response

Accounting 

and Financial 

Disclosure179

May 21, 

2020

Reconsider a 2020 rulemaking 

proposal that would permit 

issuers to omit fourth quarter 

results in annual reports and 

that would eliminate the tabular 

presentation of contractual 

obligation information. Closely 

monitor issuers’ use of non-GAAP 

metrics and accounting 

developments relating to reverse 

factoring.

Pending.

ESG Disclosure180 May 21, 

2020

Commence an effort to update 

issuer reporting requirements 

to include material, decisionuseful disclosure concerning 

environmental, social, and 

governance matters. Consider 

the utility of both principlesbased and prescriptive reporting 

requirements.

Pending.

Disclosure 

Effectiveness181

May 21, 

2020

Enhance the effectiveness of new 

and existing disclosure relied on 

primarily by retail investors by, 

among other things, adopting 

an iterative process that includes 

disclosure research, design, and 

testing.

Pending.

SEC Guidance 

and Rule 

Proposals on 

Proxy Advisors 

and Shareholder 

Proposals182

Jan. 24, 

2020

Revisit priorities in improving 

the proxy system, revise and 

republish the 2019 proxy voting 

rulemaking proposals, and 

reconsider the 2019 proxy voting 

guidance.

Pending.

Exchange 

Rebate Tier 

Disclosure183

Jan. 24, 

2020

Require the national securities 

exchanges to provide the 

Commission with regular 

disclosures regarding rebate tiers 

offered to their members, and 

take steps to require monthly 

public disclosure of these rebate 

practices.

Pending.
40 | OFFICE OF THE INVESTOR ADVOCATE

Topic Date IAC Recommendation SEC Response

Proxy Plumbing Sept. 5, 2019 Require end-to-end vote 

confirmations to end users of the 

proxy system, require all involved 

to cooperate in reconciling 

vote-related information, conduct 

studies on investor views on 

anonymity and share lending, and 

finalize the 2016 universal proxy 

rulemaking proposal.

Pending.

Structural 

Changes to 

the US Capital 

Markets 

Regarding 

Investment 

Research in a 

Post-MiFID II 

World184

July 25, 

2019

Prioritize certain concepts and 

guiding principles, including 

the following: (1) consumers of 

research, regardless of location, 

should be allowed to choose 

whether to purchase research 

“bundled” or “unbundled” from 

trading costs; and (2) there 

should be greater transparency 

regarding research costs and how 

those costs are borne.

On Nov. 12, 2019, the Commission 

extended temporary no-action relief 

from compliance with registration 

under the Advisers Act for brokers that 

receive payments for research in hard 

dollars or through research payment 

accounts from managers subject to 

MiFID II through July 3, 2023.

185

Human Capital 

Management 

Disclosure186

Mar. 28, 

2019

Revise issuer disclosure 

requirements to elicit more 

insightful disclosure concerning 

how human capital within a firm 

is managed and incentivized.

On August 8, 2019, the Commission 

voted to propose rule amendments to 

modernize the description of business, 

legal proceedings, and risk factor 

disclosures that issuers are required to 

make pursuant to Regulation S-K. The 

amendments include the addition of 

human capital resources as a disclosure 

topic.

187

Proposed 

Regulation 

Best Interest, 

Form CRS, and 

IA Fiduciary 

Guidance.

188

Follows a 

recommendation 

of Nov. 22, 2013, 

on Broker-Dealer 

Fiduciary Duty.

189

Nov. 7, 2018 Clarify the standards of conduct 

for broker-dealers and investment 

advisers with regard to the 

obligation to act in customers’ 

best interests; expand the best 

interest obligation to cover 

rollovers and recommendations 

regarding account types; 

explicitly characterize the best 

interest standard as a fiduciary 

duty; conduct usability testing 

of the proposed Form CRS and, 

if necessary, revise the proposed 

disclosures.

On June 5, 2019, the Commission 

adopted a package of rules and 

interpretations that would, among 

other things, establish a new standard 

of conduct for broker-dealers (which 

would extend to recommendations 

involving rollovers and account types), 

clarify the existing standard of conduct 

of investment advisers, interpret the 

broker-dealer exclusion from the 

definition of investment adviser, and 

require broker-dealers and investment 

advisers to provide a brief relationship 

summary to retail investors.

Broker-dealers and investment advisers 

are required to comply with this 

package of rules and interpretations as 

of June 30, 2020.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 41

Topic Date IAC Recommendation SEC Response

Transaction Fee 

Pilot for NMS 

Stocks190

Sept. 13, 

2018

Adopt a proposed Transaction 

Fee Pilot with the following 

conditions: (1) include a “no 

rebate” bucket; (2) permit 

companies to opt out of the pilot; 

and (3) consider consolidating 

Test Groups 1 and 2.

On Dec. 19, 2018, the Commission 

adopted new Rule 610T of Regulation 

NMS to conduct a Transaction Fee Pilot 

in NMS stocks.

191 On March 28, 2019, 

following a lawsuit filed by several 

exchanges, the Commission issued 

an order staying the rule and pilot 

program pending final resolution of the 

petitions.

192

Financial 

Support for Law 

School Clinics 

that Support 

Investors193

Mar. 8, 2018 Explore ways to improve external 

funding sources to the law school 

investor advocacy clinics. Work 

with FINRA, NASAA, and other 

potential partners, and request 

legislation from Congress to 

consider permanent funding.

Pending.

Dual Class 

and Other 

Entrenching 

Governance 

Structures 

in Public 

Companies194

Mar. 8, 2018 Direct Division of Corporate 

Finance staff to scrutinize 

disclosure documents filed 

by issuers with dual class and 

other entrenching governance 

structures, comment on such 

documents so as to enhance 

the salience and detail of risk 

disclosure, and develop guidance 

to address a range of issues that 

such structures raise.

Pending.

Mutual 

Fund Cost 

Disclosure195

Apr. 14, 2016 Enhance investors’ understanding 

of mutual fund costs and the 

impact of those costs on total 

accumulations over time. Provide 

standardized disclosure of actual 

dollar costs on customer account 

statements.

On June 5, 2018, the Commission issued 

a request for comment seeking input 

from individual investors and other 

interested parties on how to enhance 

the delivery, design, and content of 

fund disclosures, including shareholder 

reports and prospectuses.

196 The 

request for comment solicits 

investor feedback on, among other 

things, fund fees and expenses, and 

includes questions related to the 

IAC recommendation (e.g., dollar vs.

percentage disclosure, disclosure within 

account statements, etc.).

197

On Oct. 30, 2018, the Commission 

proposed amendments to help investors 

make informed investment decisions 

regarding variable annuity and variable 

life insurance contracts.

198 On March 

11, 2020, the Commission adopted the 

amendments largely as proposed.

199
42 | OFFICE OF THE INVESTOR ADVOCATE

Topic Date IAC Recommendation SEC Response

Accredited 

Investor 

Definition200

Oct. 9, 2014 Evaluate whether the current 

definition achieves the goal of 

identifying a class of individuals 

who are able to make an 

informed investment decision and 

protect their interests without 

the protections of registration 

and disclosure. Consider other 

definitional approaches.

On December 18, 2015, SEC staff 

published a report that discussed, 

among other alternatives, using 

sophistication as a component of the 

accredited investor definition.

On June 18, 2019, the Commission 

issued a Concept Release on 

Harmonization of Securities Offering 

Exemptions.

201 The release sought 

comment regarding the accredited 

investor definition and whether 

it should include investors with 

demonstrable financial sophistication.

On December 18, 2019, the Commission 

proposed broadening the accredited 

investor definition, including by adding 

new categories of natural persons that 

may qualify as accredited investors 

based on their professional knowledge, 

experience, or certifications.

202

Impartiality in 

the Disclosure 

of Preliminary 

Voting Results203

Oct. 9, 2014 Ensure impartiality in the 

disclosure of preliminary proxy 

voting results.

Pending.

Universal Proxy 

Ballots204

July 25, 2013 Allow universal ballots in 

connection with short-slate 

director nominations.

On October 26, 2016, the Commission 

proposed amendments to the proxy 

rules to require parties in a contested 

election to use universal proxy cards 

that would include the names of all 

board of director nominees.

205
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 43

ENDNOTES

1 Exchange Act § 4(g)(6), 15 U.S.C. § 78d(g)(6).

2 Exchange Act § 4(g)(6)(A)(i), 15 U.S.C. § 78d(g)(6)(A)(i).

3 Exchange Act § 4(g)(6)(B)(i), 15 U.S.C. § 78d(g)(6)(B)(i).

4 Exchange Act § 4(g)(4)(A), 15 U.S.C. § 78d(g)(4)(A).

5 Exchange Act § 4(g)(8)(A), 15 U.S.C. § 78d(g)(8)(A).

6 Exchange Act § 4(g)(8)(D), 15 U.S.C. § 78d(g)(8)(D).

7 Exchange Act § 4(g)(4)(B), 15 U.S.C. § 78d(g)(4)(B).

8 Exchange Act § 4(g)(4)(C), 15 U.S.C. § 78d(g)(4)(C).

9 Exchange Act § 4(g)(4)(D), 15 U.S.C. § 78d(g)(4)(D).

10 Exchange Act § 4(g)(4)(E), 15 U.S.C. § 78d(g)(4)(E).

11 Exchange Act § 39, 15 U.S.C. § 78pp.

12 Exchange Act § 39(b)(1)(A), 15 U.S.C. § 78pp(b)(1)(A).

13 See, e.g., Human Capital Management Coalition, 

Rulemaking Petition to Require Issuers to Disclose 

Information About Their Human Capital Management 

Policies, Practices and Performance (Jul. 6, 2017), 

SEC File No. 4-711, available at https://www.sec.gov/

rules/petitions/2017/petn4-711.pdf. See also SEC, 

Recommendation of the Investor Advisory Committee 

Regarding Human Capital Management Disclosure 

(Mar. 28, 2019), https://www.sec.gov/spotlight/investoradvisory-committee-2012/human-capital-disclosurerecommendation.pdf. 

14 See, e.g., Letter from the Human Capital Management 

Coalition to Vanessa A. Countryman, Secretary, SEC 

(Oct. 22, 2019), SEC File No. S7-11-19, https://www.sec.

gov/comments/s7-11-19/s71119-6322887-194462.pdf.

15 See Modernization of Regulation S-K Items 101, 103, 

and 105, Securities Exchange Act Rel. No. 86614, 84 

Fed. Reg. 44358, 44360 (Aug. 23, 2019).

16 Id. at 44380.

17 See id. at 44370.

18 See id. (“Instead, we believe that investors would be 

better served by understanding how each company 

looks at its human capital and, in particular, where 

management focuses its attention in this space. The 

intent of the proposed requirement is to elicit, to the 

extent material to an understanding of the registrant’s 

business, disclosures regarding human capital that 

allow investors to better understand and evaluate 

this company resource and to see through the eyes of 

management how this resource is managed.”). See also 

id. at 44381 (“Overall, investors and registrants may 

benefit from the proposed amendments to Item 101(c) 

if the existing requirements result in disclosure that is 

not material to an investment decision and/or is costly 

to provide.”).

19 See William Hinman, Director, Division of Corporation 

Finance, SEC, Applying a Principles-Based Approach 

to Disclosure Complex, Uncertain and Evolving Risks, 

Remarks at the 18th Annual Institute on Securities 

Regulation in Europe (Mar. 15, 2019), https://www.

sec.gov/news/speech/hinman-applying-principles-basedapproach-disclosure-031519 (expressing the view that 

“the market is still evaluating what, if any, additional 

disclosure on these topics would provide consistently 

material and useful information” and that the staff was 

“watching carefully as market-led approaches develop 

in this area”).

20 See, e.g., World Economic Forum, Toward Common 

Metrics and Consistent Reporting of Sustainable Value 

Creation, Consultation Draft 5, 11 (Jan. 2020), https://

www.weforum.org/whitepapers/toward-commonmetrics-and-consistent-reporting-of-sustainable-valuecreation. 

21 For an example of our public advocacy on this 

topic, see Rick A. Fleming, Investor Advocate, SEC, 

Improving Disclosure with Smart Data (Oct. 24, 

2016), https://www.sec.gov/news/speech/improvingdisclosure-with-smart-data.html.

22 See Inline XBRL Filing of Tagged Data, Securities 

Exchange Act Rel. No. 83551, 83 Fed. Reg. 40846 

(Aug. 16, 2018) (specifying a structured format for the 

submission of operating company financial statement 

information).

23 See Foundations for Evidence-Based Policymaking Act 

of 2018, Pub. L. No. 115-435, § 201, 132 Stat. 5529, 

5534-5544 (2019) (with the OPEN Government Data 

Act beginning at Section 202).
44 | OFFICE OF THE INVESTOR ADVOCATE

24 See Financial Disclosures About Guarantors and 

Issuers of Guaranteed Securities and Affiliates Whose 

Securities Collateralize a Registrant’s Securities, 

Securities Exchange Act Rel. No. 88307, 85 Fed. 

Reg. 21940, 21988 (Apr. 20, 2020) (paring back a 

disclosure requirement on the rationale that it “may 

help focus investor attention on decision-relevant 

information”). See also Management’s Discussion and 

Analysis, Selected Financial Data, and Supplementary 

Financial Information, Securities Exchange Act Rel. 

No. 88093, 85 Fed. Reg. 12068 (Feb. 28, 2020) 

(proposing to eliminate Item 301 of Regulation S-K, 

Selected Financial Data and Item 302 of Regulation 

S-K, Supplementary Financial Information “because 

they are largely duplicative of other requirements”).

25 See FAST Act Modernization and Simplification 

of Regulation S-K, Securities Exchange Act Rel. 

No. 85381, 84 Fed. Reg. 12674, 12695 (Apr. 2, 

2019) (concerning incorporation of information by 

reference and hyperlinking in order to “improve the 

readability and navigability of disclosure documents 

and discourage repetition”). See also Modernization 

of Regulation S-K Items 101, 103, and 105, Securities 

Exchange Act Rel. No. 86614, 84 Fed. Reg. 44358, 

44382 (Aug. 23, 2019) (“We propose to revise Item 

103 to encourage the use of hyperlinks or crossreferences to avoid repetitive disclosure. If duplicative 

disclosure distracts investors from other important 

information, the proposal may benefit investors by 

reducing repetition and facilitating more efficient 

information processing.”). Hyperlinks and other 

text-based cross-references are not machine-readable; 

they do not enable the efficient searching that 

structuring, or tagging, enables.

26 See also Request for Comment on Earnings Releases 

and Quarterly Reports, Securities Exchange Act Rel. 

No. 84842, 83 Fed. Reg. 65601 (Dec. 21, 2018) 

(on moving from quarterly to potentially biannual 

reporting: “We seek to understand how we might 

simplify the process by which investors access, process, 

and evaluate information, for example, by relieving 

any burdens associated with investors’ efforts to 

compare an earnings release and Form 10-Q to identify 

information that is new or different.”).

27 See SEC, Office of the Investor Advocate, Report 

on Activities for Fiscal Year 2019 (Dec. 19, 2019) 

[hereinafter Report on Activities, Fiscal Year 2019] 

at 4 (describing rulemaking initiatives to update the 

disclosures provided by registrants that have material 

mining operations and the statistical disclosures 

provided by bank and savings and loan registrants, 

both instances in which the Commission could have 

incorporated structuring but determined not to), 

https://www. https://www.sec.gov/advocate/

reportspubs/annual-reports/sec-investor-advocatereport-on-activities-2019.pdf.

28 In a message to Congress accompanying a bill that 

became the Securities Act of 1933, President Franklin 

Delano Roosevelt wrote that the proposal “puts the 

burden of telling the whole truth on the seller. It should 

give impetus to honest dealing in securities and thereby 

bring back public confidence.” H.R. Rep. No. 73-85, 

at 1 (Mar. 29, 1933).

29 See Jay Clayton, Chairman, SEC, The Evolving 

Market for Retail Investment Services and ForwardLooking Regulation—Adding Clarity and Investor 

Protection while Ensuring Access and Choice (May 

2, 2018), https://www.sec.gov/news/speech/speechclayton-2018-05-02 (“Our capital markets—including 

the broad participation of the public in our capital 

markets—are the envy of the world. No other country 

has anything comparable.”). 

30 See Letter from Erik F. Gerding et al. to Vanessa 

Countryman, Secretary, SEC (Sept. 24, 2019), SEC 

File No. S7-08-19, https://www.sec.gov/comments/

s7-08-19/s70819-6193340-192501.pdf [hereinafter 

Law Professors’ Letter].

31 See Concept Release on Harmonization of Securities 

Offering Exemptions, Securities Act Rel. No. 10649, 

84 Fed. Reg. 30460, 30465 (June 26, 2019) (presenting 

statistical data from the 2008-2019 time period).

32 See Written Testimony of Renee M. Jones, Associate 

Dean for Academic Affairs and Professor of Law, 

Boston College Law School, Before the U.S. House 

of Representatives, Committee on Financial Services, 

Subcommittee on Capital Markets, Securities, and 

Investments (Sept. 9, 2019), https://financialservices.

house.gov/uploadedfiles/hhrg-116-ba16-wstatejonesr-20190911.pdf. 

33 See “The number of listed firms in the U.S. 1980-2019, 

by quarter,” available at IPO Data, Jay R. Ritter, Joseph 

B. Cordell Eminent Scholar Chair, University of Florida 

Warrington College of Business, https://site.warrington.

ufl.edu/ritter/files/Listed_19802019.pdf. 

34 See Jason Zweig, As Shareholders Disappear, Darkness 

Falls on Performance, Wall St. J. (June 14, 2016).

35 See, e.g., Letter from Barbara Roper and Micah 

Hauptman, Consumer Federation of America, to 

Vanessa Countryman, Secretary, SEC (Oct. 1, 2019), 

SEC File No. S7-08-19, https://www.sec.gov/comments/

s7-08-19/s70819-6235037-192692.pdf. 

36 See Law Professors’ Letter, supra note 30, at 1-2.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 45

37 See, e.g., Concept Release on Harmonization of 

Securities Offering Exemptions, Securities Act Rel. 

No. 10649, 84 Fed. Reg. 30460 (June 26, 2019). See 

also Facilitating Capital Formation and Expanding 

Investment Opportunities by Improving Access to 

Capital in Private Markets, Securities Act Rel. No. 

10763, 85 Fed. Reg. 17956 (Mar. 31, 2020).

38 See Amendments to Exemptions from the Proxy Rules 

for Proxy Voting Advice, Exchange Act Rel. No. 

87457, 84 Fed. Reg. 66518 (Dec. 4, 2019).

39 See Procedural Requirements and Resubmission 

Thresholds under Exchange Act Rule 14a-8, 

Exchange Act Rel. No. 87458, 84 Fed. Reg. 66458 

(Dec. 4, 2019).

40 See SEC, Recommendation of the Investor Advisory 

Committee Regarding SEC Guidance and Rule 

Proposals on Proxy Advisors and Shareholder 

Proposals (Jan. 24, 2020), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/

sec-guidance-and-rule-proposals-on-proxy-advisorsand-shareholder-proposals.pdf.

41 See generally Concept Release on Equity Market 

Structure, Exchange Act Rel. No. 61358, 75 Fed. Reg. 

3,594 (Jan. 21, 2010).

42 See Disclosure of Order Handling Information, 

Exchange Act Rel. No. 84528, 83 Fed. Reg. 58,338 

(Nov. 19, 2018), https://www.federalregister.

gov/d/2018-24423. 

43 See Transaction Fee Pilot for NMS Stocks, Exchange 

Act Rel. No. 84875, 84 Fed. Reg. 5,202 (adopted 

Dec. 19, 2018), https://www.federalregister.

gov/d/2018-27982. 

44 See Publication or Submission of Quotations Without 

Specified Information, Exchange Act Rel. No. 87115, 

84 Fed. Reg. 58,206 (proposed Sept. 26, 2019), https://

www.federalregister.gov/d/2019-21260. 

45 See Order Directing the Exchanges and the Financial 

Industry Regulatory Authority To Submit a New 

National Market System Plan Regarding Consolidated 

Equity Market Data, Exchange Act Rel. No. 88827 

(adopted May 8, 2020), https://www.sec.gov/rules/sro/

nms/2020/34-88827.pdf. 

46 See Market Data Infrastructure, Exchange Act Rel. No. 

88216, 85 Fed. Reg. 16,726 (proposed Feb. 14, 2020), 

https://www.federalregister.gov/d/2020-03760. 

47 See SEC, Press Release, SEC Seeks Public Comment 

on Transfer Agent Rules, 2015-288 (Dec. 22, 2015), 

https://www.sec.gov/news/pressrelease/2015-288.html. 

48 See Joint Industry Plan, Order Approving the National 

Market System Plan Governing the Consolidated Audit 

Trail, Exchange Act Rel. No. 79318 (Nov. 15, 2016), 

https://www.sec.gov/rules/sro/nms/2016/34-79318.pdf.

49 See Self-Regulatory Organizations; Investors Exchange 

LLC; Order Instituting Proceedings to Determine 

Whether to Approve or Disapprove a Proposed Rule 

Change to Add a New Discretionary Limit Order Type 

Called D-Limit, Exchange Act Rel. No. 88501, 85 Fed. 

Reg. 18,612 (Apr. 2, 2020) https://www.federalregister.

gov/d/2020-06856.

50 See Comments on File No. SR-IEX-2019-15, available 

at https://www.sec.gov/comments/sr-iex-2019-15/

sriex201915.htm. 

51 See S.945 - Holding Foreign Companies Accountable 

Act, 116th Congress (2019-2020), https://www.

congress.gov/bill/116th-congress/senate-bill/945.

52 See, e.g., Self-Regulatory Organizations; The Nasdaq 

Stock Market LLC; Notice of Filing of Proposed Rule 

Change to Amend IM-5101-1 (Use of Discretionary 

Authority) to Deny Listing or Continued Listing or to 

Apply Additional and More Stringent Criteria to an 

Applicant or Listed Company Based on Considerations 

Related to the Company’s Auditor or When a 

Company’s Business is Principally Administered in a 

Jurisdiction That is a Restrictive Market, Exchange Act 

Rel. No. 88987 (June 2, 2020) https://www.sec.gov/

rules/sro/nasdaq/2020/34-88987.pdf. 

53 See Report on Activities, Fiscal Year 2019, supra 

note 27, at 12-13, https://www. https://www.sec.gov/

advocate/reportspubs/annual-reports/sec-investoradvocate-report-on-activities-2019.pdf.

54 See Exchange-Traded Funds, Securities Act Rel. No. 

10695, Investment Company Act Release No. 33646, 

84 Fed. Reg. 57162 (adopted Sept. 25, 2019).

55 Id. at section II.C.

56 Id. at section II.A.3; see also Report on Activities, Fiscal 

Year 2019, supra note 27, at 13-14.

57 See Investment Company Act Rel. No. 33477 (May 20, 

2019) [hereinafter Precidian Order].

58 See Heather Bell, New Era of Active ETFs Set to 

Begin, ETF.com (Mar. 31, 2020), https://www.etf.

com/sections/features-and-news/new-era-active-setbegin?nopaging=1.

59 See Precidian Order, supra note 57.
46 | OFFICE OF THE INVESTOR ADVOCATE

60 See Investment Company Act Rel. No. 33710 (Dec. 

10, 2019); Investment Company Act Rel. No. 33711 

(Dec. 10, 2019); Investment Company Act Rel. No. 

33712 (Dec. 10, 2019); Investment Company Act 

Rel. No. 33713 (Dec. 10, 2019). The first of these 

second-generation non-transparent ETFs launched 

in June 2020. See James Lord, Fidelity Debuts 

Semi-Transparent ETFs with Triple Launch, ETF 

Strategy (June 8, 2020), https://www.etfstrategy.

com/fidelity-debuts-semi-transparent-etfs-with-triplelaunch-95487.

61 See Robert J. Jackson, Commissioner, SEC, and Allison 

Herren Lee, Commissioner, SEC, Public Statement: 

Statement of Commissioners Jackson and Lee on 

Non-Transparent Exchange Traded Funds (Nov. 15, 

2019), https://www.sec.gov/news/public-statement/

statement-jackson-lee-2019-11-15. 

62 See id. Despite these reservations, Commissioners 

Jackson and Lee supported the approval of exemptive 

relief for these non-transparent ETFs because 

“the Staff’s work produced important guardrails 

that will help protect investors from the risks of 

non-transparent funds” and, given that the exemptive 

relief for Precidian had previously been approved 

over Commissioner Jackson’s dissent, “the benefits of 

facilitating competition among the various models, 

rather than single fund control over the nontransparent 

ETF market, weighs in favor of our support.”.

63 See Use of Derivatives by Registered Investment 

Companies and Business Development Companies; 

Required Due Diligence by Broker-Dealers and 

Registered Investment Advisers Regarding Retail 

Customers’ Transactions in Certain Leveraged/Inverse 

Investment Vehicles, Exchange Act Rel. No. 87607, 

Investment Company Act Rel. No. 33704, 85 Fed. Reg. 

4446 (proposed Nov. 25, 2019).

64 See, e.g., Jay Clayton, Chairman, SEC, Public 

Statement: Taking Significant Steps to Modernize Our 

Regulatory Framework (Sept. 26, 2019), https://www.

sec.gov/news/public-statement/clayton-2019-09-26-

three-rulemakings (“I believe it would be premature to 

include leveraged and inverse ETFs within the scope of 

[the ETF Rule] before the Commission has addressed 

the investor protection concerns that have been raised 

regarding these products.”).

65 See Derivatives Proposal, supra note 63 at section 

II.G.4.

66 Request for Comment on Fund Retail Investor 

Experience and Disclosure, Securities Act Rel. No. 

10503, Exchange Act Rel. No. 83376, Investment 

Company Act Rel. No. 33113 (June 5, 2018).

67 See Updated Disclosure Requirements and Summary 

Prospectus for Variable Annuity and Variable 

Life Insurance Contracts, Securities Act Rel. No. 

10765, Exchange Act Rel. No. 88358, Investment 

Company Act Rel. No. 33814, 85 Fed. Reg. 25964 

(Mar. 11, 2020) at https://www.federalregister.

gov/documents/2020/05/01/2020-05526/updateddisclosure-requirements-and-summary-prospectus-forvariable-annuity-and-variable-life [hereinafter Variable 

Annuity Summary Prospectus Adopting Release].

68 See SEC, Recommendation of the Investor Advisory 

Committee on Disclosure Effectiveness (May 21, 

2020), https://www.sec.gov/spotlight/investoradvisory-committee-2012/disclosure-effectivenessrecommendation.pdf. 

69 See Rick A. Fleming, Investor Advocate, SEC, 

Statement Regarding the SEC’s Rulemaking Package 

for Investment Advisers and Broker-Dealers (June 5, 

2019), https://www.sec.gov/news/public-statement/

statement-regarding-sec-rulemaking-packageinvestment-advisers-broker-dealers. 

70 See SEC, Office of the Investor Advocate, Report on 

Objectives for Fiscal Year 2020 (June 27, 2019), at 12,

https://www.sec.gov/files/sec-office-investor-advocatereport-on-objectives-fy2020.pdf. 

71 Jean Eaglesham and Rob Barry, More Than 5,000 

Stockbrokers From Expelled Firms Still Selling 

Securities, Wall St. J. (Oct. 4, 2013).

72 See Mark Egan, Gregor Matvos, and Amit Seru, 

“The Market for Financial Adviser Misconduct,” 

J. Pol. Econ. 127, no. 1 (Feb. 2019), 233, 

217-272, https://www.journals.uchicago.edu/doi/

pdfplus/10.1086/700735 (noting that “relative to 

other advisors who left the same firm at the same time, 

advisors who engaged in misconduct are hired by firms 

that employ a greater percentage of other advisers with 

past misconduct records”). 

73 See FINRA, Regulatory Notice 19-17; Protecting 

Investors from Misconduct (May 2, 2019), https://

www.finra.org/sites/default/files/2019-05/RegulatoryNotice-19-17.pdf.

74 Id. The new rule would “create a multi-step process 

to guide FINRA’s determination of whether a member 

raises investor protection concerns substantial enough 

to require it to be subject to additional obligations,” 

such as deposits of cash or qualified securities, or 

other conditions or restrictions deemed to be in the 

public interest.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 47

75 We continue to encourage FINRA, as part of this 

proposed rulemaking or other related rulemakings, 

to expand public access to the underlying data sets, 

models, and rankings it uses to assess broker risk. 

Public availability of this information will allow 

stakeholders to independently appraise, based on their 

individual tolerance levels, the risk posed by specific 

brokers and firms. As stated in our Report on Activities 

for Fiscal Year 2018, public accessibility to risk data for 

brokers is inadequate and overdue given the prevalence 

and sophistication of investor-friendly resources 

capable of processing such information. SEC, Office of 

the Investor Advocate, Report on Activities for Fiscal 

Year 2018 (Dec. 20, 2018) at 20. https://www.sec.

gov/advocate/reportspubs/annual-reports/sec-investoradvocate-report-on-activities-2018.pdf.

76 For example, in certain circumstances, if FINRA 

determines that a member firm triggers the new 

proposed rule, it will grant that member a one-time 

opportunity to reduce its staffing levels such that it no 

longer exceeds the applicable thresholds.

77 See Financial Industry Regulatory Authority, Inc.; 

Notice of Filing of a Proposed Rule Change to Address 

Brokers with a Significant History of Misconduct, 

Exchange Act Rel. No. 88600, 85 Fed. Reg. 20745 

(Apr. 14, 2020). 

78 See Paul G. Auwaeter, M.D., Coronavirus

COVID-19 (SARS-CoV-2), Johns Hopkins ABX 

Guide (May 13, 2020).

79 See, e.g., Mark Hulbert, Despite the Stock Market’s 

Breathtaking Rally, Investors are Closer to Despair, 

MarketWatch (May 12, 2020); Cynthia Koons et al., 

The Next Covid Crisis Could be a Wave of Suicides, 

Bloomberg (May 8, 2020).

80 See Press Release, Consumer Expectations 

Deteriorate Sharply for the Second Consecutive 

Month (Fed. Reserve Bank of NY, May 11, 2020) 

at https://www.newyorkfed.org/newsevents/news/

research/2020/20200511.

81 Id.

82 Michael S. Derby, New York Fed Finds Big 

Deterioration in Consumer Views in April, Wall St. J.

(May 11, 2020).

83 See supra note 80, Press Release, Consumer 

Expectations Deteriorate Sharply for the Second 

Consecutive Month (Fed. Reserve Bank of NY, 

May 11, 2020).

84 Id.

85 Id.

86 Id.

87 See Scott R. Baker et al., The Unprecedented Stock 

Market Impact of COVID-19 (National Bureau 

of Economic Research Working Paper 26945, 

Apr. 30, 2020).

88 Id.

89 See YCharts: US Investor Sentiment, % Bearish: 

45.02% for Wk of May 21 2020 at https://ycharts.com/

indicators/us_investor_sentiment_bearish.

90 Id.

91 See supra note 87 (NBER Paper).

92 Id. at 1.

93 Id.

94 Id.

95 Id.

96 Id. at 4-5.

97 Id. at 5.

98 See SEC Division of Economic and Risk Analysis, 

Economic and Risk Outlook (April 23, 2020), https://

www.sec.gov/files/DERA_Economic-and-RiskOutlook-Report_Apr2020.pdf. 

99 Id. (DERA quarterly report).

100 Justin McCarthy, Stock Investments Lose Some Luster 

After COVID-19 Sell-Off (Gallup, Apr. 24, 2020) 

(summarizing findings from Gallup’s annual Economic 

and Personal Finance Survey conducted Apr. 1-14, 2020).

101 Id.

102 Id.

103 Id.

104 Id.

105 Id.

106 Id.

107 See Rob Berger, How COVID-19 Has Changed 

Retirement Planning (Forbes Advisor, May 11, 2020) 

(reporting results of a Forbes Advisor-commissioned 

YouGov survey of 9,765 U.S. adults to get a deeper 

read on how the coronavirus has impacted retirement 

planning).
48 | OFFICE OF THE INVESTOR ADVOCATE

108 Id.

109 Id.

110 See Lee Barney and Rebecca Moore, EBRI Calls 

COVID-19’s Impact on Retirement Security 

‘Manageable’ (Plan Sponsor, May 6, 2020) (reporting 

on a March 20 EBRI Supplemental Retirement 

Confidence Survey).

111 See Steven Peikin, Co-Director, SEC Division of 

Enforcement, Keynote Address: Securities Enforcement 

Forum West 2020 at https://www.sec.gov/news/speech/

keynote-securities-enforcement-forum-west-2020. 

112 See SEC, Coronavirus (COVID-19), Division of 

Corporation Finance Securities and Exchange 

Commission CF Disclosure Guidance: Topic No. 

9 (March 25, 2020), https://www.sec.gov/corpfin/

coronavirus-covid-19; https://www.sec.gov/news/

public-statement/statement-teotia-financial-reportingcovid-19-2020-04-03. See also https://www.sec.gov/

news/public-statement/statement-clayton-hinman. 

113 See SEC Press Release 2020-95, SEC Forms CrossDivisional COVID-19 Market Monitoring Group 

(Apr. 24, 2020) at https://www.sec.gov/news/pressrelease/2020-95.

114 Id.

115 Id.

116 Id.

117 Exchange Act § 4(g)(8) (B), 15 U.S.C. § 78d(g)(8)(B).

118 Exchange Act § 4(g)(8)(D), 15 U.S.C. § 78d(g)(8)(D).

119 As used in this report, the term “Ombudsman” may 

refer to the Ombudsman, or to the Ombudsman and 

Office of the Investor Advocate staff and contractors 

directly supporting the ombudsman function.

120 Rule 10a-1 provided that, subject to certain exceptions, 

a listed security could be sold short (i) at a price above 

the price at which the immediately preceding sale was 

effected (plus tick), or (ii) at the last sale price if it was 

higher than the last different price (zero plus tick). See

17 CFR § 240.10a-1.

121 See What We Do, SEC (June 10, 2013), https://www.

sec.gov/Article/whatwedo.html.

122 BrokerCheck is a free tool that enables investors to 

research the professional backgrounds of brokers and 

brokerage firms. About BrokerCheck, https://www.

finra.org/investors/about-brokercheck (last visited May 

20, 2020).

123 When an investor opens an account at a brokerage firm, 

the agreement almost always includes a mandatory 

pre-dispute arbitration clause that specifies that any 

legal dispute between the investor and the broker will 

be resolved using FINRA’s arbitration and mediation 

dispute resolution forum.

124 SR-FINRA-2020-005, Notice of Filing of a Proposed 

Rule Change to Amend the FINRA Code of Arbitration 

Procedure for Customer Disputes and the FINRA 

Code of Arbitration Procedure for Industry Disputes to 

Apply Minimum Fees to Requests for Expungement of 

Customer Dispute Information, Rel. No. 34-88251; File 

No. SR-FINRA-2020-005 (Feb. 20, 2020), https://www.

sec.gov/rules/sro/finra/2020/34-88251.pdf.

125 The Central Registration Depository (CRD) is the 

securities industry online registration and licensing 

database. Information in CRD is obtained through 

forms that brokers, brokerage firms, and regulators 

complete as part of the securities industry registration 

and licensing process.

126 See BrokerCheck by FINRA, https://brokercheck.

finra.org. For more information on what is included 

in BrokerCheck, go to https://www.finra.org/investors/

learn-to-invest/choosing-investment-professional/aboutbrokercheck. 

127 See FINRA, Frequently Asked Questions about FINRA 

Rule 2080 (Expungement), https://www.finra.org/

registration-exams-ce/classic-crd/faq/finra-rule-2080-

frequently-asked-questions.

128 See supra note 124 at 4.

129 See supra note 124 at 8.

130 See FINRA Rules 12901(a)(1)(B) and 12901(a)(1)(C) 

and FINRA Rules 13901(a)(2) and 13901(a)(3).

131 See supra note 124 at 8.

132 See supra note 124 at 9, n. 23.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 49

133 See Letter from FINRA to SEC (May 18, 2020), 

https://www.sec.gov/comments/sr-finra-2020-005/

srfinra2020005-7214393-216896.pdf. Seven 

commenters submitted comment letters to the SEC: 

Steven B. Caruso, Maddox Hargett & Caruso, P.C., 

Feb. 21, 2020; Robin M. Traxler, Senior Vice President, 

Policy & Deputy General Counsel, Financial Services 

Institute, Mar. 18, 2020; Samuel Edwards, President, 

Public Investors Advocate Bar Association, Mar. 18, 

2020; Christopher Gerold, President, North American 

Securities Administrators Association, Inc., Mar. 18, 

2020; Dochtor D. Kennedy, President & Founder, 

AdvisorLaw, LLC, Mar. 18, 2020; Lauren K. Petersen, 

Christina Buru, Gia Fernicola, Legal Interns and 

Christine Lazaro, Director of the Securities Arbitration 

Clinic and Professor of Clinical Legal Education, 

Securities Arbitration Clinic at St. John’s University 

School of Law, Mar. 18, 2020; Richard P. Ryder, 

President, Securities Arbitration Commentators, Inc., 

Mar. 26, 2020. The comment letters are available at 

https://www.sec.gov/comments/sr-finra-2020-005/

srfinra2020005.htm.

134 Id. at 2.

135 Id. at 3.

136 Id.

137 Self-Regulatory Organizations; Financial Industry 

Regulatory Authority, Inc.; Order Approving a 

Proposed Rule Change to Amend the FINRA Code of 

Arbitration Procedure for Customer Disputes and the 

FINRA Code of Arbitration Procedure for Industry 

Disputes to Apply Minimum Fees to Requests for 

Expungement of Customer Dispute Information. 

Release No. 34-88945; File No. SR-FINRA-2020-005 

(May 26, 2020), https://www.sec.gov/rules/sro/

finra/2020/34-88945.pdf.

138 Self-Regulatory Organizations; Financial Industry 

Regulatory Authority, Inc.; Notice of Filing of a 

Proposed Rule Change to Amend FINRA Rule 12000 

Series to Expand Options Available to Customers if 

a Firm or Associated Person is or Becomes Inactive 

Release No. 34-87557; File No. SR-FINRA-2019-027 

(Nov. 18, 2019), Fed. Reg. 64581 (Nov. 22, 2019),

https://www.sec.gov/rules/sro/finra/2019/34-87557.pdf.

139 See Statistics on Unpaid Customer Awards in FINRA 

Arbitration, https://www.finra.org/arbitrationmediation/statistics-unpaid-customer-awards-finraarbitration. “Most unpaid customer arbitration awards 

are rendered against firms or individuals whose FINRA 

registration has been terminated, suspended, cancelled, 

or revoked, or who have been expelled from FINRA. 

These firms and individuals are generally referred to 

as ‘inactive,’ and are no longer FINRA members or 

associated with a FINRA member, although they may 

continue to operate in another area of the financial 

services industry where FINRA registration is not 

required. Firms and individuals can become inactive 

prior to an arbitration claim being filed, during an 

arbitration proceeding, or subsequent to an arbitration 

award, and this status can be caused by FINRA’s 

action, such as when a firm or individual is suspended 

for failing to pay an award, or by the firm’s or 

individual’s own voluntary action.” See also, Report on 

Activities, Fiscal Year 2019, supra note 27, at 32.

140 See Report on Activities, Fiscal Year 2019, supra note 

27, at 27.

141 See Letter from FINRA to SEC (Feb. 11, 2020) 

https://www.sec.gov/comments/sr-finra-2019-027/

srfinra2019027-6796335-208356.pdf. Five 

commenters submitted comment letters to the SEC: 

Steven B. Caruso, Maddox, Hargett & Caruso, P.C. 

November 2019, Benjamin P. Edwards, Associate 

Professor of Law, University of Nevada, Las Vegas, 

Dec. 11, 2019; Kevin Carroll, Managing Director 

and Associate General Counsel, Securities Industry 

and Financial Markets Association, Dec. 12, 2019; 

Samuel B. Edwards, President, Public Investors 

Arbitration Bar Association, Dec. 13, 2019; and Robin 

M. Traxler, Senior Vice President, Policy & Deputy 

General Counsel, Financial Services Institute, SEC, 

Dec. 13, 2019. The comment letters are available at 

https://www.sec.gov/comments/sr-finra-2019-027/

srfinra2019027.htm. 

142 Self-Regulatory Organizations; Financial Industry 

Regulatory Authority, Inc.; Order Approving a 

Proposed Rule Change to Amend FINRA Rule 12000 

Series to Expand Options Available to Customers if 

a Firm or Associated Person Is or Becomes Inactive, 

Release No. 34–88254; File No. SR–FINRA– 

2019–027 (Feb. 20, 2019), 85 Fed Reg. 1157 (Feb. 26, 

2020), https://www.sec.gov/rules/sro/finra/2020/34-

88254.pdf.
50 | OFFICE OF THE INVESTOR ADVOCATE

143 PIABA Comment Letter, Notice of Filing of a Proposed 

Rule Change to Amend FINRA Rule 12000 Series 

to Expand Options Available to Customers if a Firm 

or Associated Person is or Becomes Inactive (Dec. 

13, 2019), https://piaba.org/piaba-newsroom/piabacomment-letter-notice-filing-proposed-rule-changeamend-finra-rule-12000.

144 See supra note 141, Letter from FINRA to SEC, at 5.

145 See supra note 142 at 19. 

146 Id.

147 See Self-Regulatory Organizations; Financial Industry 

Regulatory Authority, Inc.; Notice of Filing of a 

Proposed Rule Change to Amend the Membership 

Application Program (“MAP”) Rules to Address 

the Issue of Pending Arbitration Claims Release No. 

34-87810; File No. SR-FINRA-2019-030 (Dec. 20, 

2019), 84 FR 72088 (Dec. 30, 2019), https://www.sec.

gov/rules/sro/finra/2019/34-87810.pdf.

148 Id. at 27.

149 See FINRA Rule 1014(a) and (b).

150 See supra note 147 at 2.

151 A request for a materiality consultation, for which 

there is no fee, is a written request from a member firm 

for FINRA’s determination on whether a contemplated 

change in business operations or activities is material 

and would therefore require a CMA or whether the 

contemplated change can fit within the framework of 

the firm’s current activities and structure without the 

need to file a CMA for FINRA’s approval. See supra

note 149 at 9.

152 See supra note 147 at 15-17.

153 See Letter from Steven B. Caruso, Maddox Hargett 

Caruso, P.C., dated January 7, 2020 (“Caruso Letter”); 

and letter from Christine Lazaro, Director of the 

Securities Arbitration Clinic and Professor of Clinical 

Legal Education, St. John’s University School of Law, 

dated January 21, 2020 (“SJU Letter”). Comment 

letters are available on the Commission’s website at 

https://www.sec.gov/comments/sr-finra-2019-030/

srfinra2019030.htm.

154 Id.

155 See Letter from FINRA to SEC (Jan. 31, 2020), 

https://www.sec.gov/comments/sr-finra-2019-030/

srfinra2019030-6730822-207419.pdf.

156 Id. at 2. 

157 See Self-Regulatory Organizations; Financial Industry 

Regulatory Authority, Inc.; Order Approving a 

Proposed Rule Change, as Modified by Amendment 

No. 1, to Amend the Membership Application 

Program (“MAP”) Rules to Address the Issue of 

Pending Arbitration Claims Release No. 34-88482; 

File No. SR-FINRA-2019-030 (Mar. 26, 2020), 85 FR 

18299 (Apr. 1, 2020), https://www.sec.gov/rules/sro/

finra/2020/34-88482.pdf at 18.

158 Id. at 17.

159 See Report on Activities, Fiscal Year 2019, supra note 

27, at 27. 

160 See SEC Coronavirus (COVID-19) Response, https://

www.sec.gov/sec-coronavirus-covid-19-response.

161 See Report on Activities, Fiscal Year 2019, supra

note 27, at 37 for more information about the OIAD 

Law School Clinic Outreach Program and a more 

detailed discussion of the history and status of investor 

advocacy clinics.

162 As formal clinic names vary, for purposes of this 

Report, all the law school securities law, securities 

arbitration, and investor protection focused clinics 

referenced herein are referred to as investor advocacy 

clinics or clinics.

163 See Report on Activities, Fiscal Year 2019, supra note 

27, at 33-34 for more information about the work of 

investor advocacy clinics.

164 We conducted in-person meetings with 14 of the 17 

investor advocacy clinics in operation at the time: seven 

in New York (Benjamin N. Cardozo School of Law, 

Cornell Law School, Fordham University School of 

Law, New York Law School, Pace University School of 

Law, St. John’s University School of Law, and Syracuse 

University School of Law); and one each in the District 

of Columbia (Howard University School of Law), 

Georgia (Georgia State University College of Law), 

Florida (University of Miami School of Law), Illinois 

(Northwestern University School of Law), Nevada 

(University of Nevada Las Vegas School of Law), New 

Jersey (Seton Hall University School of Law), and 

Pennsylvania (University of Pittsburgh School of Law). 

We reached out to the clinics at Brooklyn Law School, 

Pepperdine University School of Law, and University 

of San Francisco School of Law on several occasions; 

however, we were unable to schedule in-person visits. 

As of the close of the Reporting Period, there appear 

to be 12 investor advocacy clinics in active operation. 

The investor advocacy clinics at Brooklyn Law School, 

Seton Hall University School of Law, and the University 

of San Francisco School of Law are no longer listed 

on their law school websites, and the Georgia State 

University College of Law Investor Advocacy Clinic 

and the Syracuse University School of Law Securities 

Arbitration Clinic are closed.
REPORT ON OBJECTIVES: FISCAL YEAR 2021 | 51

165 See Prepared Remarks of Nicole G. Iannarone, 

Assistant Clinical Professor and Director, Investor 

Advocacy Clinic, Georgia State University College 

of Law (Oct. 12, 2017), https://www.sec.gov/spotlight/

investor-advisory-committee-2012/nicole-iannaroneremarks-iac-101217.pdf; Prepared Remarks of Qudsia 

Shafiq, Student Attorney, Investor Advocacy Clinic, 

Georgia State University College of Law (Oct. 12, 

2017), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/qudsia-shafiq-remarks-iac-101217.pdf; 

and Prepared Remarks of David Michael White, Director, 

Investor Advocacy Project, Seton Hall University 

School of Law (Oct. 12, 2017), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/david-whiteremarks-iac-101217.pdf. 

166 See SEC, Recommendation of the Investor Advisory 

Committee Subcommittee of the Whole: Financial 

Support for Law School Clinics that Support Investors, 

(Mar. 8, 2018), https://www.sec.gov/spotlight/

investor-advisory-committee-2012/iac030818-lawclinics-recommendation.pdf. To date, the Commission’s 

response to this Recommendation is pending.

167 See SEC, Investing in America: Commissioners Hear 

from Investors and Share Insights in Atlanta, (July 12, 

2018), https://www.sec.gov/page/atlanta-town-hall.

168 See Report on Activities, Fiscal Year 2019, supra note 

27, at 27.

169 Id.

170 Clinic directors and law student clinicians from the 

following law schools were confirmed to attend the 

Summit: Benjamin N. Cardozo School of Law, Cornell 

Law School, Howard University School of Law, New 

York Law School, Pace University School of Law, St. 

John’s University School of Law, University of Miami 

School of Law, University of Nevada Las Vegas School 

of Law, and University of Pittsburgh School of Law.

171 The Ombudsman notified the Summit attendees and 

participants of the postponement on Friday, March 

6, 2020. Coincidentally, SEC headquarters employees 

were directed to work from home the following week. 

See Renae Merle, Securities and Exchange Commission 

asks D.C. employees to work from home after 

coronavirus scare, Washington Post (Mar. 9, 2020), 

https://www.washingtonpost.com/business/2020/03/09/

securities-exchange-commission-asks-dc-employeeswork-home-due-coronavirus-scare/.

172 Exchange Act § 39(a), 15 U.S.C. § 78pp(a).

173 Id.

174 Exchange Act § 39(a)(2)(B), 15 U.S.C. § 78pp(a)(2)(B).

175 Exchange Act § 39(g), 15 U.S.C. § 78pp(g).

176 Exchange Act § 39(h), 15 U.S.C. § 78pp(h).

177 According to Exchange Act § 4(g)(6)(B)(ii), 15 U.S.C. 

§ 78d(g)(6)(B)(ii), a Report on Activities must include 

several enumerated items, and it may include “any 

other information, as determined appropriate by the 

Investor Advocate.” Exchange Act § 4(g)(6)(B)(ii), 15 

U.S.C. § 78d(g)(6)(B)(ii).

178 17 C.F.R. §§ 200.735-3(b)(2)(i), 230.122 (2014); 

Exchange Act § 24(b), 15 U.S.C. § 78x; 5 U.S.C. 

§ 552a(i)(1); SECR18-2, Section 8.5 (Nonpublic 

Information) (July 31, 2005).

179 See SEC, Recommendation of the Investor Advisory 

Committee Regarding Recommendation of the Investor 

as Owner Subcommittee on Accounting and Financial 

Reporting Disclosure (May 5, 2020), https://www.

sec.gov/spotlight/investor-advisory-committee-2012/

recommendation-of-the-investor-as-ownersubcommittee-on-accounting-and-financial-reportingdisclosure.pdf. 

180 See SEC, Recommendation of the Investor Advisory 

Committee Regarding Recommendation of the Investor 

as Owner Subcommittee on ESG Disclosure (May 14, 

2020), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/recommendation-of-the-investor-asowner-subcommittee-on-esg-disclosure.pdf.

181 See SEC, Recommendation of the Investor Advisory 

Committee Regarding Recommendation on Disclosure 

Effectiveness (May 21, 2020), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/disclosureeffectiveness.pdf.

182 See SEC, Recommendation of the Investor Advisory 

Committee Regarding SEC Guidance and Rule 

Proposals on Proxy Advisors and Shareholder 

Proposals (Jan. 24, 2020), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/

sec-guidance-and-rule-proposals-on-proxy-advisorsand-shareholder-proposals.pdf.

183 See SEC, Recommendation of the Investor Advisory 

Committee Regarding Exchange Rebate Tier 

Disclosure (Jan. 24, 2020), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/exchangerebate-tier-disclosure.pdf.

184 See SEC, Recommendation of the Investor Advisory 

Committee Structural Changes to the US Capital 

Markets Re Investment Research in a Post-MiFID II 

World (July 25, 2019), https://www.sec.gov/spotlight/

investor-advisory-committee-2012/investment-researchpost-mfid-ii-world.pdf.
52 | OFFICE OF THE INVESTOR ADVOCATE

185 See SEC, Press Release, SEC Announces Extension 

of Temporary Measure to Facilitate Cross-Border 

Implementation of the European Union’s MiFID II’s 

Research Provisions, 2019-229 (Nov. 4, 2019), https://

www.sec.gov/news/press-release/2019-229. 

186 See SEC, Recommendation of the Investor Advisory 

Committee Regarding Human Capital Management 

Disclosure (March 28, 2019), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/humancapital-disclosure-recommendation.pdf.

187 Modernization of Regulation S-K Items 101, 103, 

and 105, Securities Act Rel. No. 10668, 84 Fed. Reg. 

44358 (Aug. 23, 2019).

188 See SEC, Recommendation of the Investor Advisory 

Committee Regarding Proposed Regulation Best 

Interest, Form CRS, and Investment Advisers Act 

Fiduciary Guidance (Nov. 7, 2018), https://www.

sec.gov/spotlight/investor-advisory-committee-2012/

recommendation-on-proposed-reg-bi.pdf.

189 See SEC, Recommendation of the Investor Advisory 

Committee: Broker-Dealer Fiduciary Duty 

(Nov. 22, 2013), https://www.sec.gov/spotlight/

investor-advisory-committee-2012/fiduciary-dutyrecommendation-2013.pdf.

190 See SEC, Recommendation of the Investor Advisory 

Committee in Support of the Transaction Fee Pilot 

for NMS Stocks (Sept. 13, 2018), https://www.sec.

gov/spotlight/investor-advisory-committee-2012/

recommendation-transaction-fee-pilot-for-nms-stocks.pdf.

191 See SEC, Transaction Fee Pilot for NMS Stock, 

Release No. 34-84875 (Dec. 19, 2018), https://www.

sec.gov/rules/final/2018/34-84875.pdf.

192 SEC, Order Issuing Stay (March 28, 2019), https://

www.sec.gov/rules/other/2019/34-85447.pdf.

193 See supra note 116. 

194 See SEC, Recommendation of the Investor Advisory 

Committee: Dual Class and Other Entrenching 

Governance Structures in Public Companies (Mar. 

8, 2018), https://www.sec.gov/spotlight/investoradvisory-committee-2012/recommendation-on-dualclass-shares.pdf. 

195 See SEC, Recommendation of the Investor Advisory 

Committee Regarding Mutual Fund Cost Disclosure 

(Apr. 14, 2016), https://www.sec.gov/spotlight/investoradvisory-committee-2012/recommendation-mf-feedisclosure-041916.pdf. 

196 See Investor Experience RFC, supra note 66.

197 Id.

198 See Updated Disclosure Requirements and Summary 

Prospectus for Variable Annuity and Variable 

Life Insurance Contracts, Securities Act Rel. No. 

10569, Exchange Act Rel. No. 84508, Investment 

Company Act Rel. No. 33286, 83 Fed. Reg. 61730 

(Nov. 30, 2018) at https://www.federalregister.gov/

documents/2018/11/30/2018-24376/updateddisclosurerequirements-and-summary-prospectus-forvariableannuity-and-variable-life. 

199 See Variable Annuity Summary Prospectus Adopting 

Release, supra note 67.

200 See SEC, Recommendation of the Investor Advisory 

Committee: Accredited Investor Definition (Oct. 9, 

2014), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/investment-advisor-accrediteddefinition.pdf. 

201 SEC, Concept Release on Harmonization of Securities 

Offering Exemptions, Securities Act Rel. No. 10649, 

Exchange Act Rel. No. 86129, Investment Advisers 

Act Rel. No. 5256, Investment Company Act Rel. 

No. 33512, 84 Fed. Reg. 30460 (June 26, 2019),

https://www.sec.gov/rules/concept/2019/33-10649.pdf.

202 Amending the “Accredited Investor” Definition, 

Securities Act Rel. No. 10734, Exchange Act Rel. No. 

87784, 85 Fed. Reg. 2574 (Dec. 18, 2019), https://

www.federalregister.gov/documents/2020/01/15/2019-

28304/amending-the-accredited-investor-definition.

203 See SEC, Recommendation of the Investor 

Advisory Committee: Impartiality in the Disclosure 

of Preliminary Voting Results (Oct. 9, 2014), 

https://www.sec.gov/spotlight/investor-advisorycommittee-2012/impartiality-disclosure-prelim-votingresults.pdf. 

204 See SEC, Recommendations of the Investor Advisory 

Committee: Regarding SEC Rulemaking to Explore 

Universal Proxy Ballots (July 25, 2013), https://www.

sec.gov/spotlight/investor-advisory-committee-2012/

universal-proxy-recommendation-072613.pdf. 

205 See Universal Proxy, Exchange Act Rel. No. 79164, 

Investment Company Act Rel. No. 32339, 81 Fed. 

Reg. 79 122 (Nov. 10, 2016).

OFFICE OF THE 

INVESTOR ADVOCATE

U.S. Securities and 

Exchange Commission

100 F Street NE

Washington, DC 20549

202.551.3302