Report on 

Objectives

FISCAL YEAR 2023

REPORT ON OBJECTIVES: FISCAL YEAR 2023 | i

OFFICE OF THE INVESTOR ADVOCATE

REPORT ON OBJECTIVES

FISCAL YEAR 2023

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 

2023, beginning October 1, 2022.

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 2023, the 

activities and accomplishments of the Office will be reported not later than December 31, 2023.

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 2023 | iii

CONTENTS

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

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

POLICY AGENDA FOR FISCAL YEAR 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Crypto-Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Equity Market Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Private Fund Adviser Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ESG Disclosures for Public Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

ESG Disclosures for Investment Advisers and Investment Companies. . . . . . . . . . . . . . . 12

Fund Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Open and Machine-Readable Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

OMBUDSMAN’S REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Ombudsman Role and Standards of Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Streamlined Communications with Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . . . 21

Service by the Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Areas of Interest and Importance to Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . .24

Acting in the Interests of Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Ombudsman Outreach and Engagement Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . .29

Objectives and Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

SUMMARY OF INVESTOR ADVISORY COMMITTEE RECOMMENDATIONS AND

SEC RESPONSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 1

MESSAGE FROM THE

INVESTOR ADVOCATE

Each year, the Office of the Investor 

Advocate submits two reports to 

Congress—a Report on Objectives that 

looks forward and describes the objectives of the 

Office for the upcoming fiscal year, and a Report on 

Activities that looks backward to describe the work 

performed by the Office during the preceding fiscal 

year. After eight years as the Investor Advocate, I 

am stepping down from the role on July 1, and I 

am gratified that my final report to Congress will be 

one that looks forward.

This report describes some of the issues and 

challenges that the Office of the Investor Advocate 

will grapple with in the coming fiscal year. As 

always, we identify areas in which the staff 

undoubtedly will devote significant time and 

energy, such as crypto assets and ESG, but we 

cannot predict everything that will arise and require 

our attention. This is especially true at a time 

like this, when a new Investor Advocate will be 

appointed, bringing new priorities and interests. 

The new Investor Advocate will also appoint a 

new Ombudsman to replace Tracey McNeil, who 

recently departed the agency for a new opportunity 

after serving as the inaugural SEC Ombudsman and 

establishing an office that will have a lasting impact 

for investors.

Until a new Investor Advocate is appointed, the 

Office of the Investor Advocate will be led by Marc 

Sharma, who will continue in his longstanding role 

as Chief Counsel while helping to administer the 

functions of the Office. Latisha Brown will serve as 

the Acting Ombudsman. 

After the leadership 

transitions are complete, 

the new permanent 

Investor Advocate and 

Ombudsman will benefit 

from the true strength of 

the Office of the Investor 

Advocate—its people. 

The men and women in 

the Office are passionate 

about serving investors, 

and their expertise and wisdom are the fuel for 

the Office’s advocacy efforts. Many of the policy 

issues we confront are not easy, even when looking 

at them purely from the standpoint of serving the 

best interests of investors. For example, the practice 

known as payment for order flow creates conflicts 

of interest that may harm investors, yet it has 

contributed to a significant decline in commissions 

that investors must pay to trade securities. Staff in 

the Office have a deep understanding of complex 
2 | OFFICE OF THE INVESTOR ADVOCATE

issues like these, can explain them in understandable 

terms, and exhibit extraordinary judgment in 

recommending policy positions for the Investor 

Advocate’s consideration. Similarly, as described 

below in the report of the Ombudsman, staff for 

the Ombudsman regularly confront challenging 

issues and do the difficult work of providing 

direct service to investors, and the new permanent 

Ombudsman will benefit from the many lessons 

they have learned.

Less known, but with the potential for the greatest 

long-term impact for investors, are our efforts to 

build a library of research that will contribute to 

data-driven advocacy and, we hope, data-driven 

policymaking. We recently established the Office 

of Investor Research within the Office of the 

Investor Advocate, and its role will be to collect 

data regarding investor demographics, investing 

trends, etc., and to study how to improve the 

disclosure of important information to investors. 

The Commission, as an agency dedicated to investor 

protection, historically has conducted little research 

of this nature, and we are excited about the ways 

that our research program will be able to provide 

critical insights for future decision-making. 

It is a privilege to submit this report on the 

objectives of the Office of the Investor Advocate 

for Fiscal Year 2023. It has been an honor to serve 

as the first Investor Advocate at the U.S. Securities 

and Exchange Commission, and I am proud of the 

foundation that I have built along with the other 

pioneers who joined me and sculpted new roles 

with such high impact—people like Tracey McNeil, 

Marc Sharma, Stephen Deane, Ashlee Steinnerd, 

and Frankie White, who arrived during my first 

year, as well as the many others who joined us 

along the way. I am confident that new leadership 

will build even bigger and better things upon the 

foundation we have laid, and I look forward to 

witnessing the future successes of the Office.

Respectfully Submitted,

Rick A. Fleming

Investor Advocate 
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 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:

Assisting Retail Investors

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

Investor Advocate to assist retail investors in 

resolving significant problems such 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 problems that 

retail investors may have with the Commission or 

with SROs.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 2023.

(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.
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.8 The 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 2023, 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. For example, we will study 

the effectiveness of various disclosures that are 

provided to retail investors. We include descriptions 

of our research projects and related findings in our 

Reports on Activities, published every December.

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 2023, 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).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 2023.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 5

POLICY AGENDA FOR 

FISCAL YEAR 2023

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 Office will focus upon the 

following issues during Fiscal Year 2023:

§	Crypto-Assets

§	Equity Market Structure

§	Private Fund Adviser Regulation

§	ESG Disclosures for Public Companies

§	ESG Disclosures for Investment Advisers and 

Investment Companies

§	Fund Names

§	Open and Machine-Readable Data

As in past years, other issues are likely to arise that 

will require the attention of the Office. Moreover, 

with the appointment of a new Investor Advocate, 

the priorities of the Office may evolve during Fiscal 

Year 2023.

CRYPTO-ASSETS

Crypto-assets, already a volatile asset class, have 

been impacted by the intense financial market 

fluctuations during the first few months of 2022. 

In 2021, for instance, crypto-asset markets’ 

transaction volume grew to $15.8 trillion, an 

increase of nearly 600 percent over calendar year 

2020, as investor interest in the asset class grew.13

So far in 2022, transaction volume has continued 

to increase—to $25 trillion—but much of the 

increase in transaction volume was due to the fact 

that so many investors abandoned the asset class 

during the first few months of this year. 

The surge in the transaction volume of cryptoasset markets has been accompanied by a two-fold 

increase in illicit crypto-asset activity from 2020 

for a total of $14 billion in 2021.14 As retail 

investor interest in crypto-assets has increased, 

so have the size and frequency of crypto-asset 

fraud and investment scams.15 The proliferation 

of fraud in the crypto-asset markets has prompted 

the SEC’s Division of Enforcement to increase the 

staffing of the specialized unit handling some of 

the crypto-asset related enforcement actions.16 The 

Division of Enforcement recognizes that, going 

forward, many enforcement actions may involve 

some crypto-asset component.
6 | OFFICE OF THE INVESTOR ADVOCATE

Amid all the market volatility, there have been 

a number of regulatory developments in the 

crypto-asset space. On February 14, 2022, for 

example, the Commission charged BlockFi Lending 

LLC (BlockFi) with violations of the Investment 

Company Act of 1940 that resulted in its failure 

to register the offers and sales of its retail crypto 

lending product.17 In its settlement with the 

Commission, BlockFi agreed to pay a $50 million 

penalty, cease sales of its product, and attempt to 

attain registration under the Investment Company 

Act. Then, in an April 4, 2022 speech, SEC Chair 

Gary Gensler identified various deficiencies in the 

integrity and investor protections of crypto-asset 

markets.18 As Chair Gensler stated, “[t]here’s no 

reason to treat the crypto market differently just 

because different technology is used. We should 

be technology-neutral.”19 Chair Gensler’s remarks 

may have proved prescient, for in May 2022, 

two stablecoins lost their peg and one of them 

ultimately failed, costing investors approximately 

$40 billion in losses.20 Inevitably, questions of 

financial stability of crypto-assets have intensified.21

An important linchpin of investor protection in 

crypto-asset markets is the custody of assets, and 

there is an expanding list of firms claiming to offer 

those services.22 As we explained in our Report 

on Objectives for Fiscal Year 2022, custody of 

crypto-assets generally involves the management 

of the cryptographic private keys used to execute 

transactions.23 Due to recent Commission staff 

guidance, firms that offer custodial services 

of crypto-assets will have direction on how to 

record those custodial services on their financial 

statements. In Staff Accounting Bulletin No. 121 

(SAB 121), Commission staff set out the accounting 

treatment for custodial services of crypto-assets.24

Specifically, SAB 121 requires firms to record a 

safeguarding liability and a corresponding asset, 

separate from the underlying crypto-asset, at 

the fair value of the underlying crypto-asset. 

We believe that, on balance, SAB 121 provides 

valuable guidance on the accounting treatment 

of custodial services for crypto-assets. In Fiscal 

Year 2023, we will continue to monitor 

developments related to the custody of cryptoassets, and we will advocate for policies that 

reduce the risks of misappropriation and other 

types of unethical conduct. 

Another important consideration for investor 

protection is the extent to which the exchanges 

that facilitate crypto-asset trading should be 

regulated like traditional stock exchanges. Investors 

are protected by a fulsome panoply of rules that 

govern trading on traditional exchanges, such as 

fair access rules, market data rules, and corporate 

governance rules. Many questions remain with 

respect to the practicality of applying those types of 

rules within the context of crypto trading, and we 

will be active in our pursuit of policies that bring 

crypto-related investor protections more in line 

with the exchange rules that have served investors 

so well over the decades.

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.25 We have supported a number of 

regulatory proposals that were recently adopted, 

including a proposal from the exchanges and 

the Financial Industry Regulatory Authority 

(FINRA) to modernize the governance of 

National Market System (NMS) plans that 

produce public consolidated equity market data 

and that disseminate trade and quote data from 

trading venues.26 This new governance structure 

should reduce inherent conflicts of interest, in 

no small part by providing for non-SRO voting 

representatives on the operating committees for the 
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 7

NMS plans. In Fiscal Year 2023, we will support 

improvements to the governance of NMS plans 

that include the appropriate representation of retail 

and institutional investors.

We also continue to support efforts to modernize 

the overall infrastructure for the collection, 

consolidation, and dissemination of market data 

for NMS stocks.27 Retail investors may benefit 

from the improved content and competitive 

infrastructure for quotation and trading data, either 

directly or as participants in mutual funds and 

pension funds. In February 2022, the Commission 

instituted proceedings to determine whether to 

approve or disapprove the SROs’ proposed fee 

schedule for the expanded content required by 

the Commission rule.28 Commenters have raised 

significant issues with the current proposal from 

the exchanges, arguing that the fees are based 

on flawed methodologies and fail to provide a 

cost-based justification.29

In addition, we support the full implementation 

of the Commission’s Consolidated Audit Trail, or 

CAT. This system, years in the making, is intended 

to enhance, centralize, and generally update the 

regulatory data infrastructure available to market 

regulators.30 Full implementation should occur in 

the fourth quarter of 2022,31 and in Fiscal Year 

2023, we will encourage the Commission to use 

CAT data to improve its regulatory processes. We 

will also consider ways to enhance the CAT. For 

example, in October 2020, the Commission sought 

public comment on amendments to enhance data 

security for the CAT database,32 and we continue 

to consider the helpful comments provided in 

response to that request.

During Fiscal Year 2023, we intend to continue our 

engagement on numerous other relevant initiatives 

that we hope the Commission will continue to 

prioritize in the near future, including:

§	Shortening the security settlement period in 

the U.S. financial markets from a two-day 

settlement (referred to as T+2) to one-day 

(or shorter) for transactions in U.S. equities, 

corporate and municipal bonds, and unit 

investment trusts.33 This not only would 

respond to the IAC’s 2015 recommendation on 

the matter,34 but it also could reduce behindthe-scenes regulatory requirements that may 

have contributed to retail investor confusion 

and frustration during a period of volatile stock 

trading in January 2021.35 

§	Enhancements to the rules governing transfer 

agents, as previously discussed in a December 

2015 advanced notice of rulemaking and a 

concept release,36 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. 

§	Studying and addressing the potential conflicts 

of interest created by exchange fees and rebates 

in connection with broker-dealer order routing 

behavior. In addition, we support efforts to 

evaluate the impact of “payment for order 

flow” by market makers when broker-dealers 

make off-exchange order routing decisions, 

especially in light of the retail trading experience 

during January 2021.37
8 | OFFICE OF THE INVESTOR ADVOCATE

§	Enhance transparency in short selling as well 

as the opaque network of stock lending and 

borrowing that facilitates the practice.38 The 

period of volatile stock trading in January 

2021, in several cases involving companies with 

significant short interest, raised a number of 

policy questions. Having a repository of relevant 

data could improve the Commission’s ability 

to monitor this area of the market in real time. 

Further, additional guidance concerning what 

constitutes a broker-dealer’s reasonable basis 

for the “locate” requirement for heavily shorted 

companies should be considered. 

In addition to evaluating rulemaking by the 

Commission during Fiscal Year 2023, 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 January 2022, the Commission approved 

a proposal from the CBOE BYX Exchange, 

Inc. to make clarifying changes to a periodic 

auction process it had adopted in 2021.39 We are 

encouraged that the exchange sought to improve 

its rule language in advance of implementing the 

potentially game-changing process, and we will 

monitor the exchange’s implementation of these 

periodic auctions with an eye toward the impact on 

retail investors. 

PRIVATE FUND ADVISER REGULATION

With more than $18 trillion in gross assets, private 

funds and their advisers play an important role 

in our financial markets and the lives of everyday 

Americans. Some of the largest private fund 

investors include state, municipal, and private 

pension plans that provide retirement and other 

benefits to the American public. In Fiscal Year 

2023, we will monitor the progress of new rules 

and amendments intended to enhance regulation 

of private fund advisers, as proposed by the 

Commission on February 9, 2022, under the 

Investment Advisers Act of 1940 (Advisers Act).40

This is a rulemaking of significant magnitude and, 

if adopted, will have far-reaching consequences. As 

Chair Gensler has noted, “[p]rivate fund advisers, 

through the funds they manage, touch so much 

of our economy. Thus, it’s worth asking whether 

we can promote more efficiency, competition, 

and transparency in this field.”41 In approving the 

proposal, the Commission indicated that “[t]he 

proposed reforms are designed to protect private 

fund investors by increasing their visibility into 

certain practices, establishing requirements to 

address practices that have the potential to lead to 

investor harm, and prohibiting adviser activity that 

is contrary to the public interest and the protection 

of investors.”42

Specifically, if adopted as proposed, the new rules 

and amendments would include the following:

§	Quarterly Statement Rule. The proposal 

would require registered private fund advisers 

to distribute a quarterly statement to private 

fund investors with a detailed accounting 

of all fees and expenses paid by the private 

fund during the reporting period. In addition, 

the statement would disclose information 

regarding compensation or other amounts paid 

by the private fund’s portfolio investments 

to the adviser or any of its related persons. 

The proposal also would require advisers to 

provide information regarding the private 

fund’s performance. For liquid funds, the 

quarterly statement would provide annual net 

total returns since inception, average annual 

net total returns over prescribed time periods, 

and quarterly net total returns for the current 

calendar year. For illiquid funds, the statement 

would provide the gross and net internal 
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 9

rate of return and gross and net multiple of 

invested capital for the illiquid fund to capture 

performance from the fund’s inception through 

the end of the current calendar quarter.43

§	Private Fund Audit Rule. The proposal would 

require registered private fund advisers to cause 

the private funds they advise to undergo a 

financial statement audit at least annually and 

upon liquidation. The proposal would require 

the audited financial statements to be distributed 

to investors promptly after the completion of the 

audit. These audits would provide an important 

check on the adviser’s valuation of private fund 

assets, which often serve as the basis for the 

calculation of the adviser’s fees, and protect 

private fund investors against misappropriation 

of fund assets.44

§	Adviser-Led Secondaries Rule. The proposal 

would require a registered private fund adviser 

to obtain a fairness opinion in connection 

with an adviser-led secondary transaction. In 

these transactions, advisers often offer existing 

fund investors the option to sell or exchange 

their interests in the private fund for interests 

in another vehicle advised by the adviser. An 

independent opinion provider would opine on 

the fairness of the price being offered to the 

private fund for any assets being sold as part 

of the transaction. The proposal also would 

require the adviser to prepare and distribute to 

the private fund investors a summary of any 

material business relationships the independent 

opinion provider has or has had within the past 

two years with the adviser or any of its related 

persons. This requirement would provide a 

check against an adviser’s conflicts of interest 

in structuring and leading a transaction from 

which it may stand to profit at the expense of 

private fund investors.45

§	Prohibited Activities Rule. The proposal would 

prohibit all private fund advisers from engaging 

in certain activities and practices that tend to 

create conflicts of interest that could reasonably 

lead to fraud and investor harm because such 

practices incentivize an adviser to place its 

interests ahead of the private fund’s interests.46

These practices include:

» Charging certain fees and expenses to a 

private fund or its portfolio investments, 

such as fees for unperformed services 

(e.g., accelerated monitoring fees) and 

fees associated with an examination or 

investigation of the adviser;

» Seeking reimbursement, indemnification, 

exculpation, or limitation of its liability for 

certain activity;

» Reducing the amount of an adviser clawback 

by the amount of certain taxes;

» Charging fees or expenses related to a 

portfolio investment on a non-pro rata basis; 

and

» Borrowing or receiving an extension of credit 

from a private fund client.

§	Preferential Treatment Rule. The proposal 

would prohibit all private fund advisers 

from providing preferential terms to certain 

investors regarding redemptions from the fund 

or information about portfolio holdings or 

exposures. It also would prohibit all private 

fund advisers from providing other preferential 

treatment unless disclosed to current and 

prospective investors. This proposal is designed 

to protect investors by prohibiting specific types 

of preferential treatment that have a material, 

negative effect on other investors.47
10 | OFFICE OF THE INVESTOR ADVOCATE

§	Books and Records Rule Amendments. The 

proposal includes amendments to the books 

and records rule under the Advisers Act that 

require advisers to retain records related to 

the proposed rules. The amendments would 

facilitate the SEC’s ability to assess an adviser’s 

compliance with the proposed rules.48

§	Compliance Rule Amendments. The proposal 

includes amendments to the compliance rule 

under the Advisers Act that require all registered 

advisers, including those that do not advise 

private funds, to document their annual review 

in writing.49

We believe this package of reforms could provide 

significant benefits for investors in private 

markets. However, commenters have noted the 

breadth of the proposed reforms, and some 

have argued that the proposals could lead to 

unintended consequences for investors, such as 

the imposition of substantial compliance costs 

and the difficulty of attracting subsequent capital 

infusions into the fund. We are evaluating these 

concerns and look forward to working with 

our colleagues in the Division of Investment 

Management as the initiative progresses through 

the rulemaking process.

ESG DISCLOSURES FOR PUBLIC 

COMPANIES

For a number of years, investors have been 

demanding more information about the risks 

attending Environmental, Social, and Governance 

(ESG) matters.50 ESG assets reportedly surpassed 

$35 trillion in 2020, up from $30.6 trillion in 2018 

and $22.8 trillion in 2016.51 By some indications, 

global ESG assets may exceed $41 trillion in 

2022 and $50 trillion by 2025. A recent survey 

by a major auditing firm found that investors 

increasingly are willing to take action if they 

believe certain companies are not addressing ESG 

issues adequately, including seeking to engage the 

company in dialogue, voting against executive 

compensation agreements, seeking inclusion of ESG 

targets in executive pay, voting against director 

appointments and, in some cases, even divesting 

their holdings from such companies.52

There is ample evidence of investor demand 

for ESG disclosure and the clamor for such 

information can no longer be ignored. We believe 

that ESG information is often decision-useful, 

and we have a history of support for high-quality, 

consistent, and comparable ESG disclosure. Most 

recently, in our Report on Objectives for Fiscal 

Year 2022, we argued that while principles-based 

ESG measures are more flexible and can generate 

information for investors that is most relevant 

within the context of a particular business, 

principles-based requirements tend to generate 

disclosures that can be difficult to compare across 

a variety of companies.53 For that reason, we have 

advocated for prescriptive requirements to promote 

comparability wherever possible, particularly with 

respect to disclosure requirements for objectivelydeterminable facts.

Climate-Related Disclosures

On March 21, 2022, the Commission proposed 

certain climate-related disclosures for investors, 

partly in response to the intense and long-standing 

investor interest in ESG disclosure.54 The 

proposal, if adopted, would require registrants 

to provide certain climate-related information in 

their registration statements and annual reports, 

including information about climate-related 

financial risks and climate-related financial metrics 

in their financial statements.55 According to the 

Commission, the disclosure of this information 

would provide consistent, comparable, and 

reliable—and therefore decision-useful—

information to investors to enable them to make 

informed judgments about the impact of climaterelated risks on current and potential investments.56
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 11

One particular area of focus in the proposal is 

greenhouse gas (GHG) emissions. Generally, 

the proposal would require public companies 

to disclose information about the following:

§	The registrant’s direct GHG emissions 

(Scope 1) and indirect GHG emissions from 

purchased electricity and other forms of 

energy (Scope 2), separately disclosed, 

expressed both by disaggregated constituent 

greenhouse gases and in the aggregate, and in 

absolute terms, not including offsets, and in 

terms of intensity (per unit of economic value 

or production); and

§	Indirect emissions from upstream and 

downstream activities in a registrant’s value 

chain (Scope 3), if material, or if the registrant 

has set a GHG emissions target or goal that 

includes Scope 3 emissions, in absolute terms, 

not including offsets, and in terms of intensity.57

The proposed disclosure of Scope 3 GHG emissions 

in particular has generated stiff debate over how to 

measure such emissions, what to include as Scope 

3 emissions, and what Scope 3 information would 

be material.58 In apparent recognition of these more 

difficult questions, the proposal would exempt 

Scope 3 emissions disclosure from the attestation 

requirements that apply to Scope 1 and Scope 2 

emissions. In addition, the proposal offers some 

workarounds for Scope 3 emissions disclosure:

§	A safe harbor for Scope 3 emissions disclosure 

from certain forms of liability under the federal 

securities laws;

§	An exemption for smaller reporting companies 

(SRCs) from the Scope 3 emissions disclosure 

provision; and

§	A delayed compliance date for Scope 3 

emissions disclosure.59

The proposal indicates that disclosures about 

climate-related risks and metrics reflecting those 

risks can have an impact on public companies’ 

financial performance or position and may be 

material to investors in making investment or 

voting decisions.60 The proposal notes that many 

investors—including shareholders, investment 

advisers, and investment management companies—

already seek information about climate-related 

risks from companies to inform their investment 

decision-making.61

We are mindful of the diversity of viewpoints 

associated with ESG disclosure, and we look 

forward to reviewing the comments submitted 

in response to the Commission’s climate-related 

disclosure proposal. As we indicated in our Report 

on Objectives for Fiscal Year 2022, we will help 

ensure that, as the Commission works through this 

complicated rulemaking, investors’ interests remain 

at the forefront of the discussion.

Human Capital

A company’s workforce is a key source of value, 

and investors benefit when they can look to the 

Commission’s corporate disclosure system to 

evaluate material facts related to public companies’ 

human capital management (HCM). Recognizing 

the importance of such information, in March 

2019, the IAC recommended that the Commission 

incorporate HCM as part of the Commission’s 

“Disclosure Effectiveness Review” and its overall 

approach to modernizing corporate reporting and 

disclosure.62 Further, the IAC recommended that 

the Commission consider both: 

§	Requiring registrants to comply with principlesbased disclosure requirements asking them to 

detail their HCM policies and strategies; and 

§	Developing metrics to evaluate the success of 

HCM strategies and investments that can reflect 

the varied circumstances of different businesses.
12 | OFFICE OF THE INVESTOR ADVOCATE

We are pleased that HCM disclosure remains on 

the Commission’s regulatory agenda, as made 

public pursuant to the Regulatory Flexibility Act.63

We look forward to working with Commission 

staff to develop HCM disclosures that are decisionuseful for investors.

ESG DISCLOSURES FOR 

INVESTMENT ADVISERS AND 

INVESTMENT COMPANIES

We will also monitor the progress of amendments 

to rules and reporting forms proposed by the 

Commission on May 25, 2022, to promote 

consistent, comparable, and reliable information 

for investors concerning funds’ and advisers’ 

incorporation of ESG factors.64 According to 

Chair Gensler, it is “important that investors have 

consistent and comparable disclosures about asset 

managers’ ESG strategies so they can understand 

what data underlies funds’ claims and choose the 

right investments for them.”65 We agree.

While ESG strategies have existed for decades, 

interest in these strategies has rapidly increased 

in recent years, with significant inflows of capital 

to ESG-related investment products and advisory 

services. Asset managers have responded to the 

increased demand by creating and marketing ESG 

products.66 In the U.S. alone, in 2021 there were 

approximately 740 mutual funds and ETFs with 

assets totaling $549 billion that could be considered 

as investing according to ESG criteria.67 ESG funds 

reportedly attracted $649 billion globally in the 

first eleven months of 2021, up from $542 billion 

in all of 2020 and $285 billion in 2019.68

Currently, the ways that different funds and 

advisers define ESG can vary widely. Similarly, 

there are significant differences in the data, criteria, 

and strategies used as part of ESG strategies. The 

lack of disclosure requirements and a common 

disclosure framework tailored to ESG investing 

make it harder for investors who seek to understand 

which investments or investment policies are 

associated with a particular ESG strategy. In the 

absence of informative disclosures, a fund’s or 

adviser’s disclosure could exaggerate its actual 

consideration of ESG factors. Our Office has indicated 

our concern regarding this activity (commonly known 

as “greenwashing”) in previous reports.69

The proposed rule and form amendments are 

designed to provide consistent standards for ESG 

disclosures, allowing investors to make better 

informed decisions as they compare various 

ESG investments. The proposal’s framework for 

ESG-related strategy disclosure is designed to enable 

investors to determine whether a fund’s or adviser’s 

ESG marketing statements translate into concrete and 

specific measures taken to address ESG goals and 

portfolio allocation. The proposal also requires certain 

environmentally focused funds to disclose information 

regarding the greenhouse gas (GHG) emissions 

associated with their portfolio.

The proposal identifies three categories of ESG funds, 

and sets forth requirements tailored to each category:

§	Integration Funds. Funds that integrate ESG factors 

alongside non-ESG factors in investment decisions 

would be required to describe how ESG factors are 

incorporated into their investment process.

§	ESG-Focused Funds. Funds for which ESG factors 

are a significant or main consideration would be 

required to provide detailed disclosure, including a 

standardized ESG strategy overview table.

§	Impact Funds. A subset of ESG-Focused Funds 

that seek to achieve a particular ESG impact would 

be required to disclose how it measures progress on 

its objective.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 13

Integration Funds would be required to make 

generally similar disclosures in their brochures 

with respect to their consideration of ESG factors 

in the significant investment strategies or methods 

of analysis they pursue and report certain ESG 

information in their annual filings with the 

Commission.

Certain ESG-Focused Funds would be required 

to provide additional information about their 

strategies, including information about the 

impacts they seek to achieve and key metrics to 

assess their progress. The proposal would require 

funds that use proxy voting or engagement with 

issuers as a significant means of implementing their 

ESG strategy to provide additional information 

about their proxy voting or ESG engagements, 

as applicable.

The proposal generally would require ESG-Focused 

Funds that consider environmental factors in 

their investment strategies to disclose additional 

information regarding the GHG emissions 

associated with their investments. These funds 

would be required to disclose the carbon footprint 

and the weighted average carbon intensity of their 

portfolio. The requirements are designed to meet 

demand from investors seeking environmentally 

focused fund investments for consistent and 

comparable quantitative information regarding the 

GHG emissions associated with their portfolios and 

to allow investors to make decisions in line with 

their own ESG goals and expectations. Funds that 

disclose that they do not consider GHG emissions 

as part of their ESG strategy would not be required 

to report this information. Integration Funds that 

consider GHG emissions would be required to 

disclose additional information about how the 

fund considers GHG emissions, including the 

methodology and data sources the fund may use as 

part of its consideration of GHG emissions.

We look forward to reviewing the comments on 

this significant rulemaking and to continuing 

our engagement with Division of Investment 

Management staff as we help ensure that the 

interests of investors are well-represented 

throughout the rulemaking process.

FUND NAMES

On May 25, 2022, the Commission proposed 

amendments to enhance and modernize the 

Investment Company Act “Names Rule” to address 

changes in the fund industry and compliance 

practices that have developed in the approximately 

20 years since the rule was adopted.70 In Fiscal 

Year 2023, we will work with Commission staff 

to assess public comments on the proposal and 

provide input with an investor-protection focus as 

any changes are finalized. 

Broadly, the proposal recommends the following 

amendments:

§	Modernization of the 80 percent Investment 

Policy Requirement. The Names Rule currently 

requires funds with certain names to adopt a 

policy to invest 80 percent of their assets in 

the investments suggested by that name. The 

proposal would expand this requirement to 

apply to any fund name with terms suggesting 

that the fund focuses in investments that 

have, or investments whose issuers have, 

particular characteristics. This would include, 

for example, fund names with terms such as 

“growth” or “value” and those indicating that 

the fund’s investment decisions incorporate one 

or more ESG factors. Further, to address the 

rule’s application to derivatives investments, 

the proposal would require a fund to use a 

derivatives instrument’s notional amount, 

rather than its market value, for the purpose of 

determining the fund’s compliance with its 80 

percent investment policy.71
14 | OFFICE OF THE INVESTOR ADVOCATE

§	Temporary Departures from a Fund’s 80 percent 

Investment Policy. The proposal would specify 

the particular circumstances under which a 

fund may depart from its 80 percent investment 

policy, such as sudden changes in market value 

of underlying investments, including specific 

time frames for returning to 80 percent.72

§	Unlisted Closed-End Funds and Business 

Development Companies (BDCs). The proposal 

would prohibit a registered closed-end fund or 

BDC whose shares are not listed on a national 

securities exchange from changing its 80 

percent investment policy without a shareholder 

vote. This prohibition would ensure these 

investors could vote on a change in investment 

policy given their limited options to exit their 

investments if the change were made.73

§	Enhanced Prospectus Disclosure, Reporting, 

and Recordkeeping. The proposal would 

include a number of amendments to provide 

enhanced information to investors and the 

Commission about how fund names track 

their investments. The proposal would require 

fund prospectus disclosure that defines the 

terms used in a fund’s name. The proposal also 

includes amendments to Form N-PORT to 

require greater transparency on how the fund’s 

investments match the fund’s investment focus. 

The proposal would, furthermore, require funds 

to keep certain records regarding how they 

comply with the rule or why they think they are 

not subject to it.74

§	Materially Deceptive and Misleading Use of 

ESG Terminology. Under the proposal, a fund 

that considers ESG factors alongside but not 

more centrally than other, non-ESG factors 

in its investment decisions would not be 

permitted to use ESG or similar terminology 

in its name. Doing so would be defined to be 

materially deceptive or misleading. For such 

“ESG Integration Funds,” the ESG factors 

are generally no more significant than other 

factors in the investment selection process, such 

that ESG factors may not be determinative in 

deciding to include or exclude any particular 

investment in the portfolio.75

§	Modernization of Notice Requirement. The 

proposal would retain the current rule’s 

requirement that, unless the 80 percent 

investment policy is a fundamental policy of 

the fund, notice must be provided to fund 

shareholders of any change in the fund’s 

80 percent investment policy. The proposal 

would update the rule’s notice requirement 

to expressly address funds that use electronic 

delivery methods to provide information to their 

shareholders.76

We look forward to working with our Commission 

colleagues as this rulemaking initiative progresses. 

Our Office is always focused on disclosure to 

investors because it is found at the core of many 

investor-protection efforts, and a fund’s name 

may constitute the single most significant piece of 

disclosure considered by many investors.

OPEN AND MACHINE-READABLE DATA

Currently, the majority of filings to the SEC’s 

EDGAR system are submitted in HTML or ASCII, 

both of which are unstructured data languages. 

Information disclosed in these filings is difficult 

for investors and markets to access, compile, 

and analyze as compared to information that is 

submitted in a machine-readable data language. 

However, in several recent rulemaking proposals, 

the Commission has sought to require that filings 
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 15

be made using a machine-readable data language.77

For instance, in a 2021 proposal to amend rules 

regarding disclosure about repurchases of an 

issuer’s equity securities, often referred to as 

“buybacks,” the Commission proposed requiring 

Inline XBRL tagging of the repurchase disclosures, 

which would make the disclosures more readily 

available and easily accessible to investors, 

market participants, and others for aggregation, 

comparison, filtering, and other analysis.78

The Commission’s structured disclosure initiatives 

are consistent with a statutory directive known as 

the Foundations of Evidence-Based Policymaking 

Act of 2018 (the “Evidence Act”).79 Among other 

things, the Evidence Act requires federal agencies80

to put more data assets of the federal government 

into the public domain and make them available in 

open, machine-readable formats.81

The Evidence Act builds on a series of earlier 

laws and policies designed to promote the federal 

government’s transparency and accountability to 

the public at large. For instance, the Freedom of 

Information Act provides general-public access, 

with limited exemptions, to documents pertaining 

to federal agency activities.82 United States 

Department of Justice (DOJ) guidelines from 2009 

encourage agencies implementing the Freedom of 

Information Act to make discretionary disclosures 

of information and to readily and systematically 

post information online in advance of any 

public request.83 The Evidence Act codifies the 

presumption of openness of the DOJ guidelines: if a 

data asset that is maintained by an agency is subject 

to disclosure under the Freedom of Information 

Act, then the Act directs the agency to put the data 

asset in the public domain as a matter of course, or 

by default rule, unless the agency has a valid basis 

for not doing so.84 

Similarly, the Evidence Act extends a provision of 

another law governing federal agencies engaged in 

the collection and dissemination of information. 

The Paperwork Reduction Act directs federal 

agencies to consider making the information 

available in a manner that maximizes, to the 

extent feasible, the utility of the information to 

agencies and to the public from an information 

processing standpoint.85 Various policies further 

encourage agencies to collect or create information 

in a way that supports downstream information 

processing and dissemination, including specifically 

by utilizing data standards in order to maximize 

interoperability and machine-readability.86

Simply put, data standards are common ways 

of expressing information, and the Evidence Act 

requires agencies to utilize data standards going 

forward. 

Systematic implementation of the Evidence Act 

will involve intra-agency work streams as well as 

inter-agency coordination. The statute requires 

agencies to inventory their data assets87 and make 

them available in an open format.88 Agencies 

must make determinations regarding whether or 

not data assets that they maintain have been, or 

may be, released to the public, including under 

the Freedom of Information Act. For those data 

assets that are subject to disclosure under the 

Freedom of Information Act, agencies must make 

determinations regarding whether or not to release 

them to the public, taking into account existing 

law and other applicable restrictions.89 For those 

data assets that agencies determine to release to 

the public, the agencies must release them in open, 

machine-readable formats.
16 | OFFICE OF THE INVESTOR ADVOCATE

Unfortunately, implementation of the Evidence 

Act carries lopsided risks for agencies. Careful 

procedures must be in place for agency 

determinations regarding whether or not data 

assets are public data assets, as the consequences 

of releasing certain types of information required 

to be kept non-public, such as personal data 

and trade secrets, are not just irreversible but 

potentially illegal. On the other hand, there 

is no statutory penalty for failing to meet the 

Evidence Act’s requirements. The sheer scope of 

the overall directive and the lack of accompanying 

appropriated funds create implementation 

challenges, and the statute by its terms gives 

agencies flexibility in determining which data assets 

to prioritize.90 These circumstances might incline 

some agencies to wait for statutorily required 

implementation guidance to be issued by the Office 

of Management and Budget before taking any 

action at all.91

Our Office has long advocated the use of machinereadable data languages for disclosure filings 

because we believe that fundamental investment 

analysis will be made more economically feasible 

as investors and third party data providers are 

able to obtain access to machine-readable data.92

Accordingly, we support the Commission’s recent 

steps to require the filing of disclosures in a 

structured format. While these initiatives may seem 

technical and prosaic, they are vitally important 

for serving the investing public in our increasingly 

digital world—akin to earlier initiatives to move 

from paper to electronic filings.

The Commission has considerable experience 

with providing voluminous information to the 

public and, in our view, may be in a position to 

lead the federal government in implementation 

of the Evidence Act. The pay-off for investors 

is potentially enormous: more of the federal 

government’s vast trove of information made 

publicly available for the first time and made 

available in a way that facilitates maximal 

information processing capabilities. We will 

monitor developments in this area and continue 

making the legal and policy case for each of the 

Commission’s structured disclosure initiatives.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 17

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.93

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).94 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 describes the Ombudsman’s activities 

during the first six months of the current fiscal year 

and provides the Ombudsman’s objectives for the 

following full fiscal year. The Ombudsman’s Report 

included in the Investor Advocate’s December 31 

Report on Activities describes the activities and 

discusses the effectiveness of the Ombudsman95

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, 2021 through 

March 31, 2022 (Reporting Period), and discusses 

the Ombudsman’s objectives and outlook for 

Fiscal Year 2023, beginning October 1, 2022. 

OMBUDSMAN ROLE AND 

STANDARDS OF PRACTICE

The Ombudsman assists retail investors and other 

persons with concerns or complaints about the 

SEC or the 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 

§	providing periodic updates to SEC leadership so 

that they are aware of trends and significant 

emerging issues that are brought to our 

attention, and otherwise acting as an alternate 

channel of communication between retail 

investors and the SEC.
18 | 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 of their 

inquiries.

The broad role and function of the Ombudsman is 

somewhat similar to the broad roles and functions 

of ombudsmen at the other federal financial 

regulatory agencies.

Ombudsmen at the Federal Financial Regulatory Agencies

CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

CFPBOmbudsman@cfpb.gov | (855) 830-7880

www.consumerfinance.gov/cfpb-ombudsman/

The CFPB Ombudsman’s Office is an independent, impartial, and confidential 

resource that assists consumers, financial entities, consumer or trade groups, and 

others in informally resolving process issues arising from CFPB activities. Contact 

us on individual or systemic issues if existing CFPB processes did not address 

your concerns, or to keep your concerns confidential. We may assist, for example, 

by: facilitating discussions, brainstorming options, and providing feedback and 

recommendations to the CFPB.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)

ombudsman@fdic.gov | (877) 275-3342

www.fdic.gov/regulations/resources/ombudsman/index.html

The FDIC Office of the Ombudsman is a confidential, neutral, and independent 

source of information and assistance to anyone affected by the FDIC in its 

regulatory, resolution, receivership, or asset disposition activities. If you have a 

problem or complaint with the FDIC that is not involved in litigation, arbitration, 

or mediation, you may contact the Office of the Ombudsman for confidential 

assistance. Our office will work with other FDIC divisions and offices as a liaison to 

address your issue.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 19

FEDERAL RESERVE BOARD (FRB)

ombudsman@frb.gov | (800) 337-0429

www.federalreserve.gov/aboutthefed/ombudsman.htm

The Ombudsman’s office facilitates the fair and timely resolution of complaints related 

to the Federal Reserve System’s regulatory activities. The Ombudsman serves as an 

independent, confidential resource for individuals and institutions that are affected by 

the Federal Reserve System’s regulatory and supervisory actions.

NATIONAL CREDIT UNION ADMINISTRATION (NCUA)

ombudsman@ncua.gov | (703) 518-1175

www.ncua.gov/about/open-government/ombudsman

NCUA’s Ombudsman reviews consumer complaints and recommends possible solutions.

The issues generally result from process concerns. As a consumer, you may choose to 

bring your concern to the Ombudsman after attempting to obtain resolution from the 

NCUA Consumer Assistance Center.

OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)

OCCOmbudsman@occ.treas.gov | (202) 649-5530

www.occ.gov/about/who-we-are/organizations/office-of-enterprise-governance-andthe-ombudsman/index-office-of-enterprise-governance-and-the-ombudsman.html

The OCC Ombudsman, who reports directly to the Comptroller of the Currency and 

operates outside of bank supervision, ensures that bankers have access to the appeals 

process and that appeals are reviewed fairly according to existing standards. The OCC 

appeals process for national banks and federal savings associations (collectively, banks) 

provides an independent, fair, and binding means of resolving disputes arising during the 

supervisory process; helps ensure the most sound supervision decisions possible; and 

promotes open, continuous communication between banks and the OCC.

U.S. SECURITIES AND EXCHANGE COMMISSION (SEC)

ombudsman@sec.gov | (877) 732-2001

www.sec.gov/ombudsman

The SEC Ombudsman is a confidential, impartial, and independent resource who 

serves as a liaison to help retail investors—sometimes referred to as individual investors 

or Main Street investors—resolve problems they may have with the SEC or with the 

self-regulatory organizations the SEC oversees. The SEC Ombudsman also reviews 

and recommends policies and procedures to encourage persons to present questions 

and feedback about the securities laws, and establishes safeguards to maintain the 

confidentiality of communications between individuals and the SEC Ombudsman.
20 | OFFICE OF THE INVESTOR ADVOCATE

Similar to ombudsmen at the other federal financial 

regulatory agencies, the Ombudsman follows three 

core standards of practice: 

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.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 21

The Ombudsman’s Challenge

The mission statement of the SEC is to “protect 

investors, maintain fair, orderly, and efficient 

markets, and facilitate capital formation.”96 A 

primary question we encounter, then, is 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 certain 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 such limitations in mind, when investors 

contact the Ombudsman with these and similar 

requests, the Ombudsman staff routinely explains 

to investors that they have the ability to pursue 

other options, protect their interests, and preserve 

their legal rights in ways that the Ombudsman 

cannot. When appropriate, Ombudsman staff 

may inform investors about other SEC resources 

available to help address their question or concern, 

or may direct investors to external avenues of 

assistance. For example, when an investor contacts 

the Ombudsman with concerns that fall under the 

purview of another federal financial regulatory 

agency, the Ombudsman may, after obtaining 

consent from the investor, facilitate communication 

between the investor and the ombudsman from the 

appropriate federal financial regulatory agency in 

an effort to address the matter.

In addition to responding to investor complaints, 

requests and concerns on an ad hoc basis, 

Ombudsman staff also stays current on policy 

issues that affect retail investors by engaging 

with investor advocacy groups such as the North 

American Securities Administrators Association 

(NASAA), the Public Investors Arbitration Bar 

Association (PIABA), and law school securities 

arbitration clinics, which provide legal services to 

harmed investors. Through our engagement, we 

gain a deeper understanding of potential legal and 

structural difficulties retail investors may face as 

they interact with industry professionals and with 

SROs. This understanding may prompt broader 

Ombudsman action and advocacy on behalf of 

retail investors, such as research into a particular 

area of investor concern. 

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 
22 | OFFICE OF THE INVESTOR ADVOCATE

review. When an OMMS matter record is created, 

the Ombudsman can review the matter details 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, primary issue, fiscal year, 

and a number of other categories, and to review 

data and customize specific reports when a deeper 

examination is required.

While the Ombudsman encourages persons to submit 

their inquiries via the OMMS Form, 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.

The following graphic illustrates the general lifecycle 

of what happens when investors or other interested 

persons contact the Ombudsman for assistance:

START

END

We review 

your information, 

determine if you are a 

retail investor and if your 

matter concerns the SEC 

or a related SRO, and 

confirm that your 

matter is entered 

in OMMS. We review 

your matter in detail, 

including any related 

background information, 

laws, and policies.

The Ombudsman 

may contact you, 

SEC staff, and other key 

persons for more details 

on the matter. The 

Ombudsman will discuss 

your concerns about 

confidentiality, if any, 

at this point.

The Ombudsman 

and staff discuss 

your matter internally

 to determine the best 

options for resolution 

and to identify other 

resources that may 

be helpful to you.

The Ombudsman 

and staff may contact 

you to gather more 

information and to 

reply to any interim 

correspondence. This 

may occur several times 

as we work to resolve 

your matter.

The Ombudsman 

resolves your matter 

or provides options for 

you to consider. You may 

be informed that your 

matter was referred 

to another SEC division 

or office for further 

assistance or 

resolution.

We update 

your matter record 

accordingly. This 

provides the Ombudsman 

with easy access to your 

matter information 

should you have 

additional questions 

or concerns.

What Happens When You Contact the Ombudsman
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 23

SERVICE BY THE NUMBERS

To respond to inquiries effectively and efficiently, 

the Ombudsman monitors the volume of inquiries 

and the staff resources devoted to addressing 

the particular concerns raised. The Ombudsman 

tracks all inquiries received by, or referred to, the 

Ombudsman, as well as all related correspondence 

and communications to and from Ombudsman 

staff. We track the status of the inquiry from its 

receipt to its resolution or referral, and we monitor 

the staff engagement and resources utilized to 

respond to the inquiry. This helps the Ombudsman 

identify systemic or problematic issues, analyze 

matter 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. A matter is created when an initial 

contact—a new, discrete inquiry—is received by 

or referred to the Ombudsman. 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—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

The Primary Issue Categories used below are 

broad descriptive labels that reflect the submitter’s 

description or characterization of their complaint, 

based upon the information the submitter 

provided.97 During the six-month Reporting Period, 

retail investors, industry professionals, concerned 

citizens, and other interested persons contacted 

the Ombudsman for assistance on 1,374 matters 

covering 10 primary issue categories:

Matters by Primary Issue Category

October 1, 2021 – March 31, 2022

0.3%

0.5%

0.9%

0.8%

Investment Products / Retirement Accounts (407)

SEC Questions / Complaints (287)

Allegations of Securities Law Violations / Fraud (187)

SEC Investigations / Litigation / Enforcement Actions (172)

Non-SEC / Other Matters (171)

Atypical Matters (115)

Securities Laws / Rules / Regulations / Procedures (13)

FINRA Complaints / Questions / Procedures (11)

Company Disclosures and Information (7)

Securities Ownership (4)

13.6%

29.6%

12.5%

12.4%

8.4%

20.9%
24 | OFFICE OF THE INVESTOR ADVOCATE

In addition to the 1,374 matters received, we 

fielded 1,763 contacts covering 10 primary issue 

categories during the Reporting Period, for a total 

of 3,137 contacts. The chart that follows displays 

the distribution of the 3,137 total contacts by 

primary issue category:

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. The data also 

informs staff resource allocation considerations 

related to proposed program development, training, 

and outreach efforts. By tracking matters and 

contacts across primary issue categories, the data 

also helps the Ombudsman identify potential areas 

of concern or interest and enables the Ombudsman 

to act as an early warning system, as necessary, 

on the potential impact of particular issues and 

concerns raised by retail investors and others. 

While the matter and contact numbers capture the 

volume and categories of inquiries the Ombudsman 

receives, the numbers do not capture the full value 

of the services the Ombudsman provides to the 

investing public. Assisting just one investor with 

one issue can make a significant difference to that 

investor, and at times, may inform our approach as 

we examine policies, regulations, and rulemakings. 

AREAS OF INTEREST AND 

IMPORTANCE TO RETAIL INVESTORS

As noted above, the Ombudsman received 

just under 1,400 matter submissions by retail 

investors during the first half of FY 2022. The 

vignettes that follow are simplified composite 

descriptions of recurring inquiries and complaints, 

with details generalized, modified, or removed to 

avoid the disclosure of nonpublic or confidential 

information. These vignettes are included to help 

the reader better understand the context of the 

investor experience when an investor contacts the 

Ombudsman and to provide the reader with a 

better sense of the variety of submissions we receive 

from retail investors.

Contacts by Primary Issue Category

October 1, 2021 – March 31, 2022

0.3%

0.5%

1.0%

0.7%

Investment Products / Retirement Accounts (895)

SEC Questions / Complaints (638)

Allegations of Securities Law Violations / Fraud (463)

SEC Investigations / Litigation / Enforcement Actions (428)

Non-SEC / Other Matters (399)

Atypical Matters (235)

Securities Laws / Rules / Regulations / Procedures (32)

FINRA Complaints / Questions / Procedures (23)

Company Disclosures and Information (15)

Securities Ownership (9)

14.8%

28.5%

13.6%

12.7%

7.5%

20.3%
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 25

Crypto Exchanges98

The Ombudsman received numerous retail investor complaints about investments made through crypto 

exchanges. Some investors reported that their accounts had been hacked or frozen, and that they were 

unable to reach customer service for assistance. Other investors reported they had invested through crypto 

exchanges that appeared to be legitimate, only to learn when they tried to take out their alleged earnings 

that they had been defrauded. These investors were typically contacted through social media by individuals purporting to be brokers, or sometimes by individuals on dating sites as part of a “romance scam.”99

Ombudsman staff submitted complaints on behalf of many of these investors through the SEC’s Tips, 

Complaints and Referrals (TCR) system,100 and provided them with information and resources from the SEC’s 

Investor.gov website.

Dark Pools/Naked Short Selling

Many retail investors who contacted the Ombudsman expressed their frustration with the continuing market 

volatility in shares of certain stocks. A consistent complaint among these investors related to hedge fund 

short selling of certain stocks through alternative trading systems known as “dark pools” that allow users to 

place orders without publicly displaying the size and price of their orders to other participants.

101 These investors frequently alleged that hedge funds manipulated the price of certain stocks through illegal dark pool 

short sales, causing retail investors to suffer losses. Among other things, the Ombudsman informed these 

investors of the SEC’s proposal to amend Rule 13f-2 and corresponding Form SHO, which would require 

certain institutional investors to report short sale information to the SEC on a monthly basis, and make information about large short sale positions for each individual security publicly available. Ombudsman staff also 

encouraged these investors to submit comments on the proposed rules.

102

ESG Disclosure

On March 21, 2022, the SEC released its Proposed Rules to Enhance and Standardize Climate-Related Disclosures for Investors.

103 Since that time, the Ombudsman has received a broad range of submissions from 

numerous investors regarding these proposed rules. A number of investors argued that the SEC lacked 

authority to require any type of environmental impact disclosure, and/or accused the SEC of regulatory 

overreach. Others asked for more information about the costs and benefits to individual investors if such 

disclosures were ultimately required. Several others expressed support of the proposed rules, although some 

suggested that the proposed rules did not go far enough, or raised concerns that reporting loopholes would 

allow companies to obscure the information they were required to report. The Ombudsman thanked these 

investors for sharing their views and provided guidance regarding how to submit comments regarding the 

proposed rule.
26 | OFFICE OF THE INVESTOR ADVOCATE

FINRA Arbitration 

The Ombudsman received several complaints regarding the nature and processes of FINRA arbitration.

One investor, unaware that FINRA arbitration is a private system of dispute resolution, took issue with the 

fact that the hearing and any briefings or filings would not be available to the public. Another investor 

complained that a lack of information about the rules governing FINRA arbitration resulted in his failure to 

amend the statement of claim in a timely manner, and ultimately in a ruling in the respondent’s favor. The 

investor contacted the Ombudsman to determine what his options were after the arbitrator’s ruling. In replying to these investors, the Ombudsman provided them with information about FINRA arbitration generally, 

including the fact that the SEC cannot amend or overturn an arbitrator’s decision, and that FINRA does not 

allow for the appeal of an arbitration award.

104 These types of complaints and issues relating to the retail 

investor experience in the FINRA arbitration forum are part of the Ombudsman’s study of FINRA arbitration, 

further described below.

Fair Fund Distributions

Ombudsman staff helped many investors navigate the process for submitting reimbursement claims through 

SEC Fair Funds. Although most of these investors were aware that the SEC had initiated an action against 

certain individuals or companies for allegedly violating the securities laws, many had no idea if or how they 

could recover their personal losses. Ombudsman staff reviewed the enforcement actions in question to 

determine whether a distribution process had been established by the court through a Fair Fund and, if so, 

directed the investors to status reports on distribution proceedings in each case.

105 In one instance, Ombudsman staff assisted an investor whose distribution claim would have otherwise been rejected by connecting 

him with appropriate SEC staff.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 27

the parties disagree about whether to exchange 

certain documents or information, arbitrators 

can order a party to produce the documents or 

information at issue, or sanction a party for its 

failure to do so. Because arbitrators may therefore 

act as gatekeepers for the flow of information 

between parties, it is critical that arbitrators 

ensure the parties “cooperate to the fullest extent 

practicable in the exchange of documents and 

information to expedite the arbitration.”109 A 

party’s lack of access to discovery will likely impede 

that party’s ability to present its case. Viewed 

more broadly, as FINRA recently noted, “[f]ailure 

to comply with the discovery rules hinders the 

efficient and cost-effective resolution of disputes 

and undermines the integrity and fairness of 

FINRA’s forum.”110 

Given the significance of the discovery process to 

the fairness of the FINRA arbitration forum, in 

FY 2023, Ombudsman staff will continue its study 

of discovery in FINRA arbitration in an effort to 

collect empirical data on this issue. Among other 

things, the study will seek to identify correlations, 

if any, between the parties’ failure to comply with 

FINRA’s discovery rules and the cost, duration, and 

outcome of FINRA arbitrations.

Mandatory Pre-Dispute Arbitration Clauses 

in Investment Advisory Agreements

As members of FINRA, broker-dealers can avail 

themselves of the FINRA Dispute Resolution 

forum, and virtually all brokerage account 

agreements include clauses stipulating that any 

customer dispute arising in connection with the 

business activities of the broker will be arbitrated 

in FINRA’s Dispute Resolution forum.111 However, 

investment advisers that are registered with the 

SEC or state governments (RIAs) are not members 

ACTING IN THE INTERESTS OF 

RETAIL INVESTORS 

As discussed above, Ombudsman staff field retail 

investor complaints, monitor SRO rulemakings and 

activities, and engage with external stakeholders 

regarding issues of importance to retail investors. 

When possible, we look for ways to improve SEC 

and SRO processes, rules and regulations for 

the collective benefit of retail investors, and we 

advocate for those types of reforms. 

In FY 2023, Ombudsman staff will continue 

to focus efforts on studying the incidence and 

potential effects of discovery abuse in the FINRA 

Dispute Resolution forum, and will explore 

the use of mandatory pre-dispute arbitration 

clauses in investment adviser account agreements. 

Ombudsman staff will additionally track matters 

that affect senior investors, such as SRO rules that 

provide additional protections for seniors. 

Discovery Abuse in FINRA Arbitration

As noted above, parties to a FINRA arbitration 

sometimes seek the assistance of the Ombudsman 

to alter or overturn an arbitration award. 

Unfortunately, many people are unaware that the 

SEC lacks authority to modify a FINRA arbitration 

award. Similarly, FINRA has no part in deciding 

or altering an award, and there is no avenue for 

appeal of an arbitration award through FINRA.106

An arbitrator’s decision is therefore final and 

binding, and is subject to review only in federal or 

state court.107 A court may only modify or vacate 

an arbitral award in specific, rare instances.108

Arbitrators’ decisions are final throughout the 

arbitration process—including discovery, the 

process by which parties exchange documents and 

information about their case. In situations where 
28 | OFFICE OF THE INVESTOR ADVOCATE

of FINRA, and there is currently no comparable, 

dedicated forum for adjudicating disputes between 

RIAs and their clients. Nonetheless, many RIAs 

have begun including mandatory pre-dispute 

arbitration provisions in investment advisory 

agreements that require clients to resolve future 

disputes in a designated arbitral forum of the 

RIA’s choosing.112 The merits of including these 

arbitration clauses in RIA account agreements have 

been increasingly debated among industry analysts 

and interested groups. Given the importance of 

the issue for retail investors, the Office of the 

Ombudsman has been monitoring this issue and is 

preparing to undertake an inquiry into the subject.

Support for mandatory arbitration is rooted 

in the notion that arbitration is more efficient 

than litigation both in terms of time and money. 

Arbitration proceedings are generally not bound by 

the same rules of discovery and procedure as the 

courts, with fewer formal appearances and more 

relaxed standards for the admission of evidence.113

As a result, arbitrations can purportedly be 

commenced and resolved more quickly than 

traditional court proceedings.114 Supporters also 

assert that arbitrators versed in securities matters 

are more adept than juries in understanding these 

matters and in applying the law, thereby further 

expediting the arbitration process.115

However, critics of mandatory arbitration clauses 

in investment advisory agreements have raised 

several distinct concerns. First, allowing the 

RIA to select the arbitral forum might create an 

interdependent system wherein RIAs select the 

arbitral forum most likely to treat them favorably, 

and the arbitral forum has financial incentive to 

be selected by the RIA.116 Second, commenters 

have argued that the fees assessed by arbitral fora 

commonly selected by RIAs can be cost-prohibitive 

to claimants, rendering the supposed financial 

efficiencies of arbitration moot.117 Third, unlike 

FINRA arbitration cases, neither the SEC nor any 

other regulatory agency has oversight of or insight 

into other private arbitrations. Critics assert that 

this results in procedures and decisions that are 

less likely to favor retail investors.118 Moreover, 

while FINRA makes its dispute resolution statistics 

publicly available,119 there is no similar mechanism 

to track statistics from other private arbitral fora.

Taking into account the varying perspectives 

on mandatory arbitration in the RIA context, 

Ombudsman staff intends to study the frequency 

with which these arbitration clauses are used in 

investment advisory agreements, the arbitral fora 

selected and other terms included in mandatory 

arbitration clauses. This survey will provide a more 

complete understanding of RIA arbitration, and 

will help identify any problematic issues impacting 

retail advisory clients.

FINRA Rule 2165 Expands Protections for 

Seniors and Other Investors

The emergence of complex and risky investment 

strategies has created new opportunities for 

fraudsters to target seniors and others that might be 

less familiar with such strategies. Not surprisingly, 

as these investment strategies have become 

more popular, Ombudsman staff has received 

an increased volume of complaints from senior 

investors and their caregivers. To better serve the 

investors who contact our office for assistance, 

Ombudsman staff closely follows policies and rules 

that affect senior investors’ interests. 
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 29

In February 2022, FINRA expanded existing 

protections for seniors by broadening the scope of 

Rule 2165 – Financial Exploitation of Specified 

Adults.120 Rule 2165 allows member firms to place 

temporary holds on the accounts of Specified 

Adults in relation to specific types of securities 

transactions where the firm reasonably believes 

the account owner has been, is being, or will be, 

exploited.121 The term ‘Specified Adults,’ as defined 

by Rule 2165, refers to natural persons age 65 and 

older, or natural persons age 18 and older who the 

member firm reasonably believes has a mental or 

physical impairment that renders the individual 

unable to protect his or her own interests.122 The 

recently enacted amendments changed Rule 2165 

in three primary ways.

§	First, member firms are now permitted to place 

a temporary hold on securities transactions 

(in addition to disbursements of funds and 

securities) where there is a reasonable belief of 

financial exploitation of a specified adult, as 

defined by the Rule.123

§	Second, the time period for extending a 

temporary hold on a disbursement of funds, 

securities, or a transaction in securities has 

been extended for an additional 30-business 

days, where the member firm has reported the 

matter to a state regulator, agency or a court 

of competent jurisdiction.124 This change 

increased the potential maximum duration of 

a temporary hold from 25 business days to 55 

business days.125

§	Third, member firms are now required to 

retain records of the reason for any extension 

of a temporary hold, including any related 

communications with, or by, a state regulator, 

agency or court of competent jurisdiction.126

The amendments went into effect on March 17, 

2022.127 In our view, the Rule and its related 

amendments should serve as a more flexible tool 

to assist brokers in the protection of seniors and 

certain other customers where concerns exist that 

financial exploitation is or might be occurring. 

Ombudsman staff will continue to monitor and 

evaluate SRO and SEC rule proposals for potential 

benefits and harms to senior investors.

OMBUDSMAN OUTREACH AND 

ENGAGEMENT EFFORTS 

Law School Clinic Outreach Program

The importance and impact of law school investor 

advocacy clinics have increased considerably 

since 1997, when then-SEC Chairman Arthur 

Levitt, Jr. announced the creation of two pilot 

law school investor advocacy clinics to help retail 

investors with small claim cases obtain quality legal 

representation.128 Today, there are 11 law school 

investor advocacy clinics in active operation across 

the United States that provide legal counseling 

and representation to retail investors involved 

in securities industry disputes, comment on rule 

proposals, and engage with many more investors 

through community-based presentations and 

informational materials.129

As discussed in prior Ombudsman’s Reports, our 

Law School Clinic Outreach Program (LSCOP) was 

launched in 2016 to complement the Ombudsman’s 

statutory mandate and core functions.130 One goal 

of the LSCOP was, and remains, the exchange 

of information and ideas between the law school 

investor advocacy clinics and SEC staff. In their 

unique roles as counsel to retail investors with 

small claims or limited incomes, clinics are uniquely 

positioned to examine issues that confront retail 

investors from a perspective unavailable to 
30 | OFFICE OF THE INVESTOR ADVOCATE

SEC staff. The LSCOP allows the Office of the 

Investor Advocate 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.

What began in 2016 as a series of on-site visits 

to the law school clinics continued with the 

attendance of clinic directors and law students 

at public meetings of the Investor Advisory 

Committee at SEC headquarters in 2017 and 

2018, and subsequently culminated in the first 

SEC Investor Advocacy Clinic Summit at SEC 

headquarters, hosted by the Investor Advocate 

and the Ombudsman in 2019.131 The LSCOP 

continues to provide opportunities for meaningful 

involvement between the law school clinics and 

SEC staff. 

2022 SEC Investor Advocacy Clinic Summit

On Thursday, March 31, 2022, the Office of 

the Investor Advocate and the SEC Division of 

Enforcement’s Retail Strategy Task Force (RSTF) 

hosted the third SEC Investor Advocacy Clinic 

Summit (Summit) as a virtual event. The 2022 

Summit marked the first joint endeavor between 

the Office of the Ombudsman and RSTF, as 

well as the first time a portion of the program 

was broadcast live to the public. The event 

featured remarks from SEC Chair Gary Gensler, 

Commissioner Hester Peirce, Commissioner Allison 

Herren Lee, and Commissioner Caroline Crenshaw. 

All 11 active law school investor advocacy clinics 

from across the country shared their perspectives 

and engaged with subject matter experts from 

the SEC, FINRA and AARP on some of the most 

pressing issues currently facing retail investors.132

Summit Overview 

The Summit consisted of two programs. The 

morning program, an outreach event for senior 

investors and their caregivers, was open to the 

public and viewable through www.sec.gov. The 

afternoon program, open to participating law 

schools, SEC staff, and invited guests, consisted of 

presentations from clinic students about cryptoasset investments, options and margin trading, and 

digital engagement practices, or “gamification,” in 

online trading platforms. Over 400 viewers joined 

the livestreamed portion of the event, and over 150 

viewers and participants joined the rest of the event 

through the virtual platform.

Both morning and afternoon programs helped 

inform investors, practitioners and regulators 

alike of the risks for retail investors in today’s 

complex market.

Safeguarding the Golden Years: Avoiding 

Financial Fraud

In this inaugural collaboration, RSTF and the 

Office of the Ombudsman worked to create 

a public outreach event that spoke directly to 

the unique challenges senior investors and their 

caregivers are currently facing. The outreach 

team established and monitored an email Inbox 

specifically for the event, where the public could 

pose questions and share views on the concerns of 

senior investors and their caregivers. 
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 31

During the program, law students from Fordham 

University’s Securities Arbitration and Litigation 

Clinic discussed ways that predatory financial 

professionals might target senior investors. The 

students described a recent case where a senior 

couple invested with a firm they deemed to 

be trustworthy, in reliance on advertisements 

suggesting that the firm served the interests of 

seniors. Without authorization and against their 

wishes, the couple’s broker invested their funds into 

various unsuitable, risky investments. 

Law students from the University of Miami’s 

Investor Rights Clinic discussed the importance 

of establishing a caregiver plan and highlighted 

a recent case where the caregiver of a defrauded 

senior met obstacles in trying to prevent the fraud 

from occurring. 

Panelists from the SEC, AARP, and the FINRA 

Investor Education Foundation offered their 

expert insight into the issues raised by these cases, 

provided advice on how seniors and their caregivers 

might avoid predatory financial professionals, 

and responded to questions from the moderator 

and members of the public who had submitted 

questions through the designated Summit Inbox.

Clinic Presentations

The afternoon program featured timely 

presentations from nine law school clinics about 

areas of complexity and concern for retail investors. 

Each discussion panel was followed by question 

and answer sessions with SEC subject matter 

experts in these areas.

In the first panel, “Speculative Investing: Digital 

Assets and Meme Stocks,” students from the 

University of Pittsburgh School of Law Securities 

Arbitration Clinic, Cornell Law School Securities 

Law Clinic, and the Seton Hall University School of 

Law FINRA Investor Advocacy Project presented 

on the risks for retail investors when investing 

in digital assets, meme stocks, and non-fungible 

tokens (NFTs). The students addressed the 

heightened risks of these investments caused by the 

spread of misinformation on social media platforms 

and by celebrity influencers. The students also 

identified hurdles for regulators and best practices 

to avoid high-tech securities fraud schemes.

The second panel focused on the “Risks of Options 

and Margin Trading.” Students from Howard 

University School of Law Investor Justice and 

Education Clinic, Cardozo Law School Securities 

Arbitration Clinic, and St. John’s University School 

of Law Securities Arbitration Clinic described a 

client who suffered losses as a result of a broker’s 

improper execution of options trades, as well two 

clients whose lack of understanding contributed 

to significant losses in margin trades. Students 

suggested ways to bridge certain regulatory gaps in 

options and margin trading for retail investors.

During the third panel, “Gamification and Investor 

Behavior,” students from Northwestern Pritzker 

School of Law’s Investor Protection Center, New 

York Law School’s Securities Arbitration Clinic, and 

Pace University Elisabeth Haub School of Law’s 

RealFi Investor Rights Clinic identified concerns 

about the impact of “gamification” on investor 

decision-making. The students’ presentations were 

based on their own experiences as novice investors, 

as well as the experiences of clinic clients. Noted 

concerns included the encouragement of addictive 

behaviors, and the influence of gamification 

techniques to increase trading activity—like daily 

mover lists, analyst ratings, and push notifications. 

The students made suggestions to address these 

concerns, such as reminders regarding trading app 

usage, and the potential application of SEC rules 

regarding investment “recommendations.”
32 | OFFICE OF THE INVESTOR ADVOCATE

Summit Feedback 

Following the Summit, clinic directors and their 

students expressed unanimous enthusiasm for the 

opportunity to engage and exchange ideas with 

the Commission, SEC staff, and each other. Given 

the success of the prior SEC Investor Advocacy 

Clinic Summits, the Investor Advocate and the 

Ombudsman look forward to hosting future 

summits—whether as in-person, virtual, or hybrid 

events—as a signature feature of the Law School 

Clinic Outreach Program. 

OBJECTIVES AND OUTLOOK

The Office of the Ombudsman was able to 

maintain its peak staff level during the Reporting 

Period—the Ombudsman, one senior special 

counsel, one senior counsel, one senior law clerk 

contractor, and one senior paralegal contractor. 

However, in April 2022, Tracey L. McNeil, the 

first SEC Ombudsman, departed the agency for 

a new opportunity.

As the Acting Ombudsman, I look forward 

to continuing with the external and internal 

engagement efforts that the Office of the 

Ombudsman has implemented and executed, to 

strengthen relationships and increase awareness 

of the Ombudsman function. Additionally, 

I look forward to the opportunity to work with 

the ombudsmen at the other financial federal 

regulatory agencies to help investors understand 

our roles and the resources we provide. Lastly, 

I look forward to the opportunity to review 

the Ombudsman Matter Management System 

and to continue to give retail investors the 

quality of information and service that the Office 

of the Ombudsman provides as we liaise with 

retail investors.

Latisha R. Brown

Acting Ombudsman
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 33

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.133 The IAC 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.134 

Exchange Act Section 39 authorizes the IAC 

to submit findings and recommendations for 

review and consideration by the Commission.135

The statute also requires the SEC “promptly” to 

issue a public statement assessing each finding or 

recommendation of the IAC and disclosing the 

action, if any, the Commission intends to take 

with respect to the finding or recommendation.136 

While the Commission must respond to the IAC’s 

recommendations, it is under no obligation to agree 

with or act upon the recommendations.137

In each of its reports to Congress, including 

this one, the Office of the Investor Advocate 

summarizes the IAC recommendations and 

the SEC’s responses to them.138 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.139 Therefore, any such 

initiatives are not reflected in this Report.

SUMMARY OF 

INVESTOR ADVISORY COMMITTEE 

RECOMMENDATIONS AND

SEC RESPONSES
34 | OFFICE OF THE INVESTOR ADVOCATE

Topic Date IAC Recommendation SEC Response

Protecting Elder 

Investors

June 9, 2022 Propose various reforms to 

improve the deterrence and 

prosecution of investment fraud 

against seniors.

Pending.

Funding Investor 

Advocacy Clinics

June 9, 2022 Renewing a 2018 IAC 

recommendation to provide 

grants to law school clinics which 

represent investors.

Pending.

Individual Retirement 

Accounts (IRAs)140

Dec. 2, 2021 Encourage federal agencies to 

address portability and force outs; 

have the SEC address the use of 

alternative investments in IRAs; and 

coordinate with other federal and 

state regulators to improve investor 

protections over retirement 

savings.

Pending.

Special Purpose 

Acquisition 

Companies (SPACs)141

Sept. 9, 2021 Enhance disclosure requirements 

regarding the SPAC sponsor, 

potential conflicts of interest, 

mechanics of the SPAC and 

de-SPAC transactions, the 

target search process, and any 

additional funding. Publish an 

analysis of SPAC participants, their 

compensation, and their incentives.

On March 30, 2022, the SEC 

proposed adding and amending 

rules to enhance investor protection 

and disclosure related to SPAC and 

de-SPAC transactions.

142

Rule 10b5-1 Plans143 Sept. 9, 2021 Require a “cooling off” period and 

prohibit overlapping Rule 10b5-1 

plans. Require enhanced plan 

reporting and disclosures.

On Jan. 13, 2022, the SEC proposed 

amendments to Rule 10b5-1 including 

enhancements to plan reporting and 

disclosure.

144
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 35

Topic Date IAC Recommendation SEC Response

Minority and 

Underserved 

Inclusion145

March 11, 2021 Support regulations, legislation, 

programs and other steps that 

increase acquisition of financial 

assets and services by minority 

communities. Through regulatory 

oversight of financial services, 

enable a more hospitable 

environment for minority 

investment. Continue and build 

upon SEC programs that are 

directed toward increasing financial 

literacy and supporting minority 

investment. Help registered 

financial services firms expand and 

improve their ability to encourage 

investment by under-represented 

communities.

Pending.

Credit Rating 

Agencies146

March 11, 2021 Identify in Office of Credit Rating 

(OCR) reports specific nationally 

recognized statistical rating 

organizations whose conduct was 

deemed to be materially deficient.

Remodel OCR’s annual examination 

reports to conform to the approach 

utilized in the Public Company 

Accounting Oversight Board’s 

annual public inspection reports.

Pending.

Accounting and 

Financial Disclosure147 

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 

(Generally Accepted Accounting 

Principles) metrics and accounting 

developments relating to reverse 

factoring.

On June 23, 2020, the SEC’s 

Division of Corporation Finance 

staff published disclosure guidance 

addressing supplier finance programs 

in the context of pandemic-related 

disruptions.

148 On October 21, 2020, 

the Financial Accounting Standards 

Board (FASB) decided to add a 

project to its technical agenda to 

address the disclosure of supplier 

finance programs involving trade 

payables.

149 On November 19, 

2020, the Commission adopted 

the amendments to Regulation 

S-K, largely as proposed.

150 On 

December 20, 2021, FASB proposed 

new disclosures of supplier finance 

programs.

151
36 | OFFICE OF THE INVESTOR ADVOCATE

Topic Date IAC Recommendation SEC Response

ESG Disclosure152 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.

On February 24, 2021, Acting Chair 

Lee directed the SEC’s Division of 

Corporation Finance to enhance its 

focus on climate-related disclosure 

in public company filings.

153 On 

March 3, 2021, the SEC’s Division 

of Examinations announced its 

2021 examination priorities, which 

included a greater focus on climaterelated risks.

154 On March 4, 2021, the 

Commission announced the creation 

of a Climate and ESG Task Force in its 

Division of Enforcement.

155 On March 

15, 2021, Acting Chair Lee issued 

a call for public input on climate 

change disclosures.

156 On March 

21, 2022, the SEC proposed a new 

disclosure rule for climate-related 

information in public company 

filings.

157 On March 25, 2022, the SEC 

proposed amendments to rules and 

reporting forms intended to promote 

consistent, comparable, and reliable 

information for investors concerning 

funds’ and advisers’ incorporation of 

ESG factors.

158

Disclosure 

Effectiveness159

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.

On August 5, 2020, the Commission 

proposed comprehensive 

modifications to the mutual fund and 

exchange-traded fund disclosure 

framework.

160 The Office of the 

Investor Advocate is conducting 

investor research that may be 

relevant to this proposal.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 37

Topic Date IAC Recommendation SEC Response

SEC Guidance and 

Rule Proposals on 

Proxy Advisors 

and Shareholder 

Proposals161

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.

On July 22, 2020, the Commission 

adopted the amendments to the 

proxy rules without republishing 

them for further comment.

162 On 

September 23, 2020, the Commission 

adopted the amendments to 

Exchange Act Rule 14a-8 without 

republishing them for further 

comment.

163

On June 1, 2021, Chair Gensler 

directed Commission staff to 

consider whether to recommend 

further regulatory action regarding 

proxy voting advice, in particular 

whether to recommend the 

Commission revisit its related 2019 

and 2020 actions.

164 Also on June 

1, 2021, the Division of Corporation 

Finance issued a statement that it 

will not recommend enforcement 

action based on the 2019 guidance 

or the 2020 amendments while the 

Commission is considering further 

regulatory action in this area.

165

Exchange Rebate Tier 

Disclosure166

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.

Proxy Plumbing167 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.

On April 16, 2021, the Commission 

reopened the comment period 

on the proposed rules for the 

use of universal proxy cards in 

all non-exempt solicitations for 

contested director elections.

168 On 

November 17, 2021, the Commission 

adopted rule and form amendments 

to require the use of a universal 

proxy card in all non-exempt 

director election contests, 

except those involving registered 

investment companies and business 

development companies.

169
38 | OFFICE OF THE INVESTOR ADVOCATE

Topic Date IAC Recommendation SEC Response

Structural Changes 

to the US Capital 

Markets Regarding 

Investment Research 

in a Post-MiFID II 

World170

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 November 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 (Markets 

in Financial Instruments Directive) II 

through July 3, 2023.

171

Human Capital 

Management 

Disclosure172 

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 26, 2020, the Commission 

adopted 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.

173 

Transaction Fee Pilot 

for NMS Stocks174

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 December 19, 2018, Commission 

approved the adoption of new Rule 

610T of Regulation NMS to conduct a 

Transaction Fee Pilot in NMS stocks.

175

On June 16, 2020, following a lawsuit 

filed by several exchanges, the 

transaction fee pilot was struck down 

in the U.S. Circuit Court of Appeals 

for the District of Columbia.

176

Financial Support 

for Law School 

Clinics that Support 

Investors177

Mar. 8, 2018 Explore ways to improve external 

funding sources to the law school 

investor advocacy clinics. Work 

with FINRA, the North American 

Securities Administrators 

Association (NASAA), and other 

potential partners, and request 

legislation from Congress to 

consider permanent funding.

Pending.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 39

Topic Date IAC Recommendation SEC Response

Dual Class and 

Other Entrenching 

Governance 

Structures in Public 

Companies178

Mar. 8, 2018 Direct Division of Corporation 

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 

Disclosure179

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 

published a request for comment on 

ways to enhance the delivery, design, 

and content of fund disclosures, 

including shareholder reports and 

prospectuses. The request for 

comment solicited investor feedback 

on fund fees and expenses, and it 

included other questions related to 

the IAC recommendation (e.g., dollar 

vs. percentage disclosure, disclosure 

within account statements, etc.).

180

On Oct. 30, 2018, the Commission 

proposed amendments to help 

investors make informed investment 

decisions regarding variable annuity 

and variable life insurance contracts.

181

On March 11, 2020, the Commission 

adopted the amendments largely 

as proposed.

182

Shortening the 

Settlement Cycle183

Feb. 12, 2015 Shorten the security settlement 

period in the U.S. financial markets 

from a three-day settlement cycle 

(referred to as T+3) to a one-day 

settlement cycle (T+1) for “at 

least” transactions in U.S. equities, 

corporate and municipal bonds, 

and unit investment trusts.

On February 9, 2022, the 

Commission proposed to shorten 

the settlement cycle to T+1 for 

equities, corporate bonds, and other 

non-exempt securities.

184
40 | OFFICE OF THE INVESTOR ADVOCATE

Topic Date IAC Recommendation SEC Response

Accredited Investor 

Definition185

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 August 26, 2020, the Commission 

adopted amendments to the 

definition of accredited investor.

186

Among other changes, the 

amendments allow individuals to 

qualify as accredited investors if 

they possess certain professional 

credentials or affiliations, even if they 

do not meet the income or net worth 

thresholds. The Commission chose 

not to modify the definition’s income 

or net worth thresholds.

Impartiality in 

the Disclosure of 

Preliminary Voting 

Results187

Oct. 9, 2014 Ensure impartiality in the disclosure 

of preliminary voting results.

Pending.

Universal Proxy 

Ballots188

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.

189 On April 16, 2021, the 

Commission reopened the comment 

period on the proposed rules.

190 On 

November 17, 2021, the Commission 

adopted rule and form amendments 

to require the use of a universal 

proxy card in all non-exempt 

director election contests, 

except those involving registered 

investment companies and business 

development companies.

191
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 41

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 Chainalysis, The 2022 Crypto Crime Report 3 (2022), 

https://go.chainalysis.com/2022-Crypto-Crime-Report.html.

14 See id.

15 See Press Release, FTC, FTC Data Shows Huge Spike in 

Cryptocurrency Investment Scams (May 17, 2021), https://

www.ftc.gov/news-events/news/press-releases/2021/05/

ftc-data-shows-huge-spike-cryptocurrency-investmentscams; see also Blockchain Analysis in a Multi-Asset 

World: When Funds Cross Blockchains, Chainalysis (May 

12, 2022), https://gateway.on24.com/wcc/eh/3537848/

lp/3752594/blockchain-analysis-in-a-multi-asset-worldwhen-funds-cross-blockchains (comparing 251 theft 

incidents of crypto-assets in 2021 valued at $3.1 billion with 

43 theft incidents in the first quarter of 2022 valued at $1.2 

billion).

16 See Press Release, SEC, SEC Nearly Doubles Size of 

Enforcement’s Crypto Assets and Cyber Unit (May 3, 

2022), https://www.sec.gov/news/press-release/2022-78.

17 See Press Release, SEC, BlockFi Agrees to Pay $100 

Million in Penalties and Pursue Registration of its Crypto 

Lending Product (Feb 14, 2022), https://www.sec.gov/

news/press-release/2022-26; but see Statement from Hester 

M. Peirce, Comm’r, SEC, Statement on Settlement with 

BlockFi Lending LLC (Feb. 14, 2022), https://www.sec.

gov/news/statement/peirce-blockfi-20220214. 

18 See Gary Gensler, Chairman, SEC, Prepared Remarks of 

Gary Gensler on Crypto Markets at the Penn Law Capital 

Markets Association Annual Conference (Apr. 4, 2022), 

https://www.sec.gov/news/speech/gensler-remarks-cryptomarkets-040422. 

19 Id.

20 See Unstable Coins, Glassnode (May 16, 2022), https://

insights.glassnode.com/the-week-onchain-week-20-2022. 

21 See Martin Arnold, Crypto Links with Banks Pose Threat 

to Financial Stability, Says ECB, financial times (May 24, 

2022), https://www.ft.com/content/5124fe2d-0f37-4173-

89ba-fe9812e09e67; Bd. of Governors, Fed. Rsrv. Sys., 

Financial Stability Report (May 2022), https://www.

federalreserve.gov/publications/files/financial-stabilityreport-20220509.pdf. 

22 See Press Release, Alt. Inv. Mgmt. Ass’n, AIMA Publishes 

Guidance on Digital Asset Custody (Apr. 27, 2022), https://

www.aima.org/article/press-release-aima-publishesguidance-on-digital-asset-custody.html. 

23 SEC, Off. of the Inv. Advoc., Report on OBJECTIVES, 

Fiscal Year 2022, at 14, https://www.sec.gov/files/

sec-office-investor-advocate-report-on-objectives-fy2022.

pdf. 

24 See Off. of the Chief Acct., SEC, Staff Accounting 

Bulletin No. 121 (Mar. 31, 2022), 87 Fed. Reg. 21015 (Apr. 

11, 2022) (to be codified at 17 C.F.R. pt. 211), https://www.

sec.gov/oca/staff-accounting-bulletin-121; but see Statement 

from Hester M. Peirce, Comm’r, SEC, Response to Staff 

Accounting Bulletin No. 121 (Mar. 31, 2022), https://www.

sec.gov/news/statement/peirce-response-sab-121-033122. 

25 See generally Concept Release on Equity Market Structure, 

Exchange Act Release No. 61358, 75 Fed. Reg. 3594 (Jan. 

21, 2010).

26 Joint Industry Plan, Order Approving, as Modified, a 

National Market System Plan Regarding Consolidated 

Equity Market Data, Exchange Act Release No. 92586, 

86 Fed. Reg. 44,142 (Aug. 11, 2021), https://www.

federalregister.gov/d/2021-17113.

27 See Market Data Infrastructure, Exchange Act Release No. 

90610, 86 Fed. Reg. 18,596 (Apr. 9, 2021), https://www.

federalregister.gov/d/2020-28370. 
42 | OFFICE OF THE INVESTOR ADVOCATE

28 See Consolidated Tape Association, Order Instituting 

Proceedings To Determine Whether To Approve or 

Disapprove the Twenty-Fifth Charges Amendment to 

the Second Restatement of the CTA Plan and Sixteenth 

Charges Amendment to the Restated CQ Plan, Exchange 

Act Release No. 94309, 87 Fed. Reg. 11,763 (Mar. 2, 

2022), https://www.federalregister.gov/d/2022-04334; see 

also Joint Industry Plan, Order Instituting Proceedings 

To Determine Whether To Approve or Disapprove the 

Fifty-Second Amendment to the Joint Self-Regulatory 

Organization Plan Governing the Collection, Consolidation 

and Dissemination of Quotation and Transaction 

Information for Nasdaq-Listed Securities Traded on 

Exchanges on an Unlisted Trading Privileges Basis, 

Exchange Act Release No. 94307, 87 Fed. Reg. 11,787 

(Mar. 2, 2022), https://www.federalregister.gov/d/2022-

04332. 

29 See id. at 11,766. 

30 See Joint Industry Plan, Order Approving the National 

Market System Plan Governing the Consolidated Audit 

Trail, Exchange Act Release No. 79318, 81 Fed. Reg. 

84,696 (Nov. 23, 2016), https://www.sec.gov/rules/sro/

nms/2016/34-79318.pdf.

31 See Timeline, Consolidated Audit Trail, available at

https://www.catnmsplan.com/timeline/phase (last visited 

June 7, 2022); see also Full CAIS Production Certification 

and Compliance Deadlines Extended, Consolidated Audit

Trail, https://www.catnmsplan.com/announcements/

full-cais-production-certification-and-compliance-deadlinesextended (last visited June 7, 2022). 

32 See Proposed Amendments to the National Market System 

Plan Governing the Consolidated Audit Trail to Enhance 

Data Security, Exchange Act Release No. 89632, 85 Fed. 

Reg. 65,990 (Oct. 16, 2020), https://www.govinfo.gov/

content/pkg/FR-2020-10-16/pdf/2020-18801.pdf.

33 See Proposed Rule, Shortening the Settlement Cycle, 

Exchange Act Release No. 94196 (Feb. 9, 2022), 87 Fed. 

Reg. 10,436 (Feb. 24, 2022), https://www.federalregister.

gov/d/2022-03143. 

34 See SEC, Recommendation of the Investor Advisory 

Committee: Shortening the Trade Settlement Cycle in U.S. 

Financial Markets (Feb. 12, 2015), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/settlementcycle-recommendation-final.pdf. 

35 See SEC, Staff Report on Equity and Options Market 

Structure Conditions in Early 2021 (Oct. 14, 2021), https://

www.sec.gov/files/staff-report-equity-options-marketstruction-conditions-early-2021.pdf. 

36 See Press Release, SEC, SEC Seeks Public Comment on 

Transfer Agent Rules (Dec. 22, 2015), https://www.sec.gov/

news/pressrelease/2015-288.html. 

37 Digital engagement practices, or DEPs, are utilized by 

broker dealers and investment advisers as a means of 

interacting with retail investors on digital platforms. These 

include “social networking tools; games, streaks and other 

contests with prizes; points, badges, and leaderboards; 

notifications; celebrations for trading; visual cues; ideas 

presented at order placement and other curated lists or 

features; subscriptions and membership tiers; and chatbots.” 

See Request for Information and Comments on BrokerDealer and Investment Adviser Digital Engagement 

Practices, Related Tools and Methods, and Regulatory 

Considerations and Potential Approaches; Information and 

Comments on Investment Adviser Use of Technology To 

Develop and Provide Investment Advice, Exchange Act 

Release No. 92766 (Aug. 27, 2021), 86 Fed Reg. 49,067 

(Sept. 1, 2021), https://www.federalregister.gov/d/2021-

18901.

38 See Proposed Rule, Reporting of Securities Loans, 

Exchange Act Release No. 93613, 86 Fed. Reg. 69,802 

(Dec. 8, 2021), https://www.federalregister.gov/d/2021-

25739. 

39 Self-Regulatory Organizations, Cboe BYX Exchange, Inc.; 

Notice of Filing of Amendment No. 2 and Order Approving 

on an Accelerated Basis a Proposed Rule Change, as 

Modified by Amendment No. 2, To Make Clarifying 

Changes Regarding Its Periodic Auctions, Exchange Act 

Release No. 94012, 87 Fed. Reg. 4,060 (Jan. 26, 2022), 

https://www.federalregister.gov/d/2022-01465. 

40 See Private Fund Advisers; Documentation of Registered 

Investment Adviser Compliance Reviews, Investment 

Adviser Act Release No. 5955, 17 C.F.R. pt. 275 (Feb. 9, 

2022), https://www.sec.gov/rules/proposed/2022/ia-5955.

pdf [hereinafter Private Fund Advisers Release].

41 See Statement from Gary Gensler, Chairman, SEC, 

Statement on Private Fund Advisers Proposal (Feb. 9, 

2022), https://www.sec.gov/news/statement/genslerstatement-private-fund-advisers-proposal-020922. 

42 See Fact Sheet, Private Fund Proposed Reforms, SEC (Feb. 

9, 2022), https://www.sec.gov/files/ia-5955-fact-sheet.pdf.

43 See Private Fund Advisers Release, supra note 40, at section 

II.A.

44 See id. at section II.B.

45 See id. at section II.C.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 43

46 See id. at section II.D.

47 See id. at section II.E.

48 See id. at section III.

49 See id.

50 See, e.g., Lauren Foster, The SEC Is Proposing ClimateChange Disclosures. What to Know., Barron’s (Mar. 

19, 2022), https://www.barrons.com/articles/sec-climatechange-apple-stock-51647467317. 

51 Id.

52 See James Chalmers, Emma Cox, & Nadja Picard, 

The Economic Realities of ESG, PwC (Oct. 28, 2021) 

(highlighting results of PwC 2021 Global Investor Survey).

53 SEC, Off. of the Inv. Advoc., Report on Objectives, Fiscal

Year 2022, at 5, https://www.sec.gov/files/sec-officeinvestor-advocate-report-on-objectives-fy2022.pdf. 

54 See The Enhancement and Standardization of ClimateRelated Disclosures for Investors, Securities Act Release 

No. 33-11042, Exchange Act Release No. 34-94478, 

17 C.F.R. pts. 210, 229, 232, 239, 249 (Mar. 21, 2022) 

https://www.sec.gov/rules/proposed/2022/33-11042.pdf

[hereinafter Climate Release].

55 Id. 

56 Id. 

57 SEC, Fact Sheet, The Enhancement and Standardization of 

Climate-Related Disclosure for Investors at 2, https://www.

sec.gov/files/33-11042-fact-sheet.pdf. 

58 See Statement from Hester Peirce, Comm’r, SEC, We 

Are Not the Securities and Environment Commission – 

At Least Not Yet (Mar. 21, 2022), https://www.sec.gov/

news/statement/peirce-climate-disclosure-20220321; see 

also Letter from Joe Manchin III, Sen., to Gary Gensler, 

Chairman, SEC (Apr. 4, 2022), https://www.manchin.

senate.gov/imo/media/doc/SEC%20ClimateDisclosure%20

Letter.pdf?cb. 

59 Climate Release, supra note 54, at 210.

60 See id.

61 Id. 

62 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.

63 See Proposed Rule, Office of Management and Budget, 

SEC Agency Rule List, Human Capital Management, 

RIN 3235-AM88, https://www.reginfo.gov/public/do/

eAgendaViewRule?pubId=202110&RIN=3235-AM88. 

64 See Enhanced Disclosures by Certain Investment Advisers 

and Investment Companies about Environmental, Social, 

and Governance Investment Practices, Investment Adviser 

Act Release No. 6034, Investment Company Act Release 

No. 34594, 17 C.F.R. pts. 200, 230, 232, 239, 249, 274, 279 

(May 25, 2022) https://www.sec.gov/rules/proposed/2022/

ia-6034.pdf [hereinafter ESG Release].

65 See Statement from Gary Gensler, Chairman, SEC, 

Statement on ESG Disclosures Proposal (May 25, 2022), 

https://www.sec.gov/news/statement/gensler-statement-esgdisclosures-proposal-052522.

66 See Press Release, Bloomberg Intelligence, ESG May 

Surpass $41 Trillion Assets in 2022, but Not Without 

Challenges, Finds Bloomberg Intelligence (Jan. 24, 

2022), https://www.bloomberg.com/company/press/

esg-may-surpass-41-trillion-assets-in-2022-but-not-withoutchallenges-finds-bloomberg-intelligence. 

67 See 2022 Investment Company Fact Book, Investment

Company Institute, at 42, https://www.icifactbook.org/

pdf/2022_factbook.pdf. 

68 See Katanga Johnson & Ross Kerber, U.S. SEC Unveils 

Rules to Ensure ESG Funds Follow Through on 

Investments, Reuters (May 25, 2022) (citing Refinitiv 

Lipper data).

69 See, e.g., Off. of the Inv. Advoc., Report on Activities, 

Fiscal Year 2020, at 9, https://www.sec.gov/files/

sec-investor-advocate-report-on-activities-2020.pdf (“We 

are also concerned with ‘greenwashing,’ the practice of 

making misleading claims regarding companies’ or funds’ 

ESG credentials in order to draw the interest of investors 

who place value in ESG matters. Greenwashing is likely 

to grow increasingly problematic as companies and funds 

viewed as ESG-friendly continue to attract assets at an 

accelerating pace.”).
44 | OFFICE OF THE INVESTOR ADVOCATE

70 See Investment Company Names, Investment Company Act 

Release Act No. 34593 (May 25, 2022), https://www.sec.

gov/rules/proposed/2022/ic-34593.pdf; see also Investment 

Company Names, Investment Company Act Release No. 

24828 (Jan. 17, 2001), 66 FR 8509 (Feb. 1, 2001), https://

www.sec.gov/rules/final/ic-24828.htm.

71 See id. at section II.A.1.

72 See id. at section II.A.2.

73 See id. at section II.A.4.

74 See id. at section II.B.

75 See id. at section II.D.

76 See id. at section II.E.

77 See, e.g., Share Repurchase Disclosure Modernization, 

Exchange Act Rel. No. 93783, 87 Fed. Reg. 8443, 8451 

(Feb. 15, 2022); Rule 10b5-1 and Insider Trading, Exchange 

Act Rel. No. 93782, 87 Fed. Reg. 8686 (Feb. 15, 2022); 

Prohibition Against Fraud, Manipulation, or Deception 

in Connection With Security-Based Swaps; Prohibition 

Against Undue Influence Over Chief Compliance Officers; 

Position Reporting of Large Security-Based Swap Positions, 

Exchange Act Rel. No. 93784, 87 Fed. Reg. 6652 (Feb. 4, 

2022). 

78 See Share Repurchase Disclosure Modernization, Exchange 

Act Rel. No. 93783, 87 Fed. Reg. 8443, 8451 (Feb. 15, 

2022). 

79 See Foundations for Evidence-Based Policymaking Act of 

2018, Pub. L. No. 115-435, 132 Stat. 5529 (Jan. 14, 2019).

80 The requirement in 44 U.S.C. 3506 applies to the SEC: 

the term “agency” is defined in 44 U.S.C. 3502 and 

includes any “independent regulatory agency,” which, in 

turn, is defined to include the Securities and Exchange 

Commission. See Section 3502(1) and (5). 

81 The statute defines the term “data” to mean “recorded 

information, regardless of form or the media on which 

the data is recorded” and the term “data asset” to mean 

“a collection of data elements or data sets that may be 

grouped together.” 44 U.S.C. 3502(16) and (17). 

82 See 5 U.S.C. 552 et seq.

83 See Off. of the Att’y Gen., The Freedom of Information

Act (FOIA) (2009).

84 See 44 U.S.C. 3502(22) (defining the term “public data 

asset” to mean “a data asset, or part thereof, maintained by 

the Federal Government that has been, or may be, released 

to the public, including any data asset, or part thereof, 

subject to disclosure under section 552 of title 5 [i.e., the 

Freedom of Information Act]”); 44 U.S.C. 3506(b)(6)(B) 

(with respect to general information resources management, 

requiring each agency, in accordance with guidance from 

the Office of Management and Budget Director, to make 

each public data asset available as an open Government data 

asset and under an open license, where “open Government 

data asset” is defined in Section 3502(20) to mean, among 

other things, machine-readable); 44 U.S.C. 3511 (requiring 

each agency to develop and maintain a comprehensive data 

inventory and requiring each agency to submit public data 

assets as open Government data assets to a single public 

interface online as a point of entry dedicated to sharing 

agency data assets with the public, which shall be known as 

the “Federal data catalogue”). 

85 See 44 U.S.C. 3501 et seq. (see in particular Section 

3506(b)(1)(C) and (c)(3)(H)).

86 See Off. of Mgmt. & Budget, Exec. Off. of the

President, OMB M-13-13, Open Data Policy—Managing

Information as an Asset (2013); Off. of Mgmt. & Budget, 

Exec. Off. of the President, OMB Circular A-130, 

Management of Federal Information Resources (1996).

87 See 44 U.S.C. 3511(a)(1) (requiring the head of each 

agency, to the maximum extent practicable, to develop and 

maintain a comprehensive data inventory that accounts for 

all data assets created by, collected by, under the control or 

direction of, or maintained by the agency).

 88 See 44 U.S.C. 3506(b)(6)(A) (with respect to general 

information resources management, requiring each 

agency, in accordance with guidance from the Office of 

Management and Budget Director, to make each data asset 

of the agency available in an open format). 

 89 See 44 U.S.C. 3511(a)(2)(E) (requiring guidance from the 

Office of Management and Budget Director to include 

specified criteria for the head of an agency to use in 

determining whether a particular data asset should not be 

made publicly available). The Freedom of Information Act 

authorizes agencies to withhold nine enumerated categories 

of information. The Freedom of Information Act does 

not itself prohibit the agency from voluntarily disclosing 

the exempted information in its discretion, but there may 

be other statutes prohibiting disclosure, or other relevant 

considerations.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 45

90 See 44 U.S.C. 3504(b)(6)(C) (requiring the Office of 

Management and Budget Director to issue guidance for 

agencies to implement Section 3506(b)(6) in a manner 

that takes into account, among other things, the cost and 

benefits to the public of converting a data asset into a 

machine-readable format that is accessible and useful to the 

public); 44 U.S.C. 3506(d)(6)(B) (requiring, with respect 

to information dissemination, each agency to provide the 

public with the opportunity to request specific data assets 

to be prioritized for disclosure and to provide suggestions 

for the development of agency criteria with respect to 

prioritizing data assets for disclosure); 44 U.S.C. 3511(a)

(2)(E) (requiring the Office of Management and Budget 

Director to issue guidance for agencies to develop and 

maintain comprehensive data inventories; the guidance 

shall include criteria for the head of an agency to use in 

determining whether a particular data asset should not be 

made publicly available in a manner that takes into account, 

among other things, the cost and benefits to the public of 

converting the data into a format that could be understood 

and used by the public).

91 The U.S. Government Accountability Office reported 

that as of December 2021 the Office of Management 

and Budget had not issued the statutorily-required 

implementation guidance to agencies on making data 

open by default. The Government Accountability 

Office report’s first recommendation is for the Office of 

Management and Budget to issue that guidance. See U.S. 

Gov’t Accountability Off., GAO-22-104574, Open Data: 

Additional Action Required for Full Public Access 36 

(2021).

92 See, e.g., Rick A. Fleming, Investor Advocate, SEC, 

Remarks Before XBRL US Investor Forum 2016: Finding 

Value with Smart Data: Improving Disclosure with Smart 

Data (Oct. 24, 2016), https://www.sec.gov/news/speech/

improving-disclosure-with-smart-data.html.

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

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

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

to the Ombudsman, the Ombudsman and staff in the Office 

of the Ombudsman, and, at times, to staff, contractors, 

and interns in the Office of the Investor Advocate directly 

supporting the ombudsman function.

96 See SEC, About the SEC, https://www.sec.gov/about.shtml

(last visited June 7, 2022).

97 The Primary Issue Category labels are similar to the category 

labels used by other divisions and offices in public reports, 

where the category labels are based upon the submitter’s 

own characterization or description of the issue. See, for 

example, SEC, Off. of the Whistleblower, Whistleblower

Program 2020 Annual Report to Congress, at 28 and 

related footnote 80: “This breakdown reflects the categories 

selected by whistleblowers and, thus, the data represents 

the whistleblower’s own characterization of the violation 

type.” The exceptions in this Ombudsman’s Report are 

the “Non-SEC/Other Matters” category label used for 

matters not under the jurisdiction of the SEC, and the 

“Atypical Matters” category label used for matters where the 

submitter’s characterization or description of the issue makes 

it difficult to determine the nature of the complaint.

98 A crypto exchange is a platform on which an investor 

can buy and sell crypto. These exchanges can be used 

to trade one crypto for another, or to buy crypto using 

regular currency, such as US dollars. See Want to Buy 

Crypto? Here’s What to Look for in a Crypto Exchange, 

NextAdvisor (May 3, 2022) https://time.com/nextadvisor/

investing/cryptocurrency/what-are-cryptocurrencyexchanges/#:~:text=A%20crypto%20exchange%20

is%2%20a,of%20the%20cryptocurrencies%20they%20offer.

99 See Scammers Defraud Victims of Millions of Dollars in New 

Trend in Romance Scams, Public Service Announcement, 

Federal Bureau of Investigation (Sept. 16, 2021) https://

www.ic3.gov/Media/Y2021/PSA210916.

100 SEC, Online Portal, Report Suspected Securities Fraud or 

Wrongdoing, https://www.sec.gov/tcr (last visited June 7, 

2022).

101 See Investor.gov, Glossary, Alternative Trading Systems 

(ATSs), https://www.investor.gov/introduction-investing/

investing-basics/glossary/alternative-trading-systems-atss

(last visited June 7, 2022).

102 See SEC, Short Position and Short Activity Reporting by 

Institutional Investment Managers, Exchange Act Release 

No. 34-94313 (Feb. 25, 2022); https://www.sec.gov/rules/

proposed/2022/34-94313.pdf (proposing release). 

103 See Climate Release, supra note 54.

104 See Investor Bulletin, Broker-Dealer/Customer Arbitration 

(Dec. 20, 2016) https://www.sec.gov/oiea/investor-alertsbulletins/ib_arbitration.html.
46 | OFFICE OF THE INVESTOR ADVOCATE

105 See SEC, Information for Harmed Investors, https://www.

sec.gov/enforce/information-for-harmed-investors (last 

visited June 7, 2022).

106 See 2021 FINRA Arbitrators Guide, at p. 11 (February 

2021) (“FINRA makes available an arbitration forum—

pursuant to rules approved by the SEC—but has no part in 

deciding the award.”), available at https://www.finra.org/

sites/default/files/arbitrators-ref-guide.pdf. 

107 See FINRA Rule 12904.

108 A Court may issue an order vacating an arbitration award 

in any of the following cases: “(1) where the award was 

procured by corruption, fraud, or undue means; (2) where 

there was evident partiality or corruption in the arbitrators, 

or either of them; (3) where arbitrators were guilty of 

misconduct in refusing to postpone the hearing, upon 

sufficient cause shown, or in refusing to hear evidence 

pertinent and material to the controversy; or of any other 

misbehavior by which the rights of any party have been 

prejudiced; or (4) where the arbitrators exceeded their 

powers, or so imperfectly executed them that a mutual, 

final, and definite award upon the subject matter was not 

made.” 9 U.S.C. § 10(a).

109 FINRA Rule 12505.

110 See 2021 FINRA Dispute Resolution Services Arbitrator’s 

Guide, at p. 41 (February 2021), https://www.finra.org/sites/

default/files/arbitrators-ref-guide.pdf. 

111 See FINRA Rule 12200. See also Arbitration Overview, 

FINRA.org, (n.d.), https://www.finra.org/arbitrationmediation/arbitration-overview#:~:text=A%20broker%20

or%20a%20brokerage,firms%20and%20brokers%2C%20

or%20brokers.

112 See Christine Lazaro and Michael S. Edmiston, Op Ed: 

Costly Forced Arbitration against RIAS Harms Investors, 

(January 14, 2022) (hereinafter PIABA Op Ed), https://

www.piaba.org/piaba-newsroom/oped-costly-forcedarbitration-against-rias-harms-investors-christinelazaro-and.

113 See, e.g., McMahon v. Shearson/American Express, 

Inc., 482 U.S. 220, 229-30 (1987) (parties to arbitration 

trade “the procedures and opportunity for review of the 

courtroom for the simplicity, informality and expedition of 

arbitration”).

114 Id.

115 See, e.g., JAMS, Arbitration: A Powerful Tool for Achieving 

Fair, Expeditious Resolution, https://www.jamsadr.com/

arbitration (last visited May 16, 2022) (“Arbitration at 

JAMS allows the parties to select a neutral with industryspecific expertise and to define the process best suited to 

resolve their dispute...”).

116 Press Release, Sen. Jeff Merkley (D-OR) & U.S. Rep. Bill 

Foster, (D-IL), Foster, Merkley Lead Bicameral Investor 

Choice Act (Dec. 6, 2019) (hereinafter Foster, Merkley 

Press Release), https://www.merkley.senate.gov/news/

press-releases/foster-merkley-lead-bicameral-investorchoice-act-2019 (“[W]hen an investment advisor or broker 

chooses the judge, pays the judge, and promises future 

business to the judge, you know that the system is rigged 

against you.”) (quoting Sen. Jeff Merkley).

117 See PIABA Op Ed, supra note 112.

118 See generally Foster, Merkley Press Release, supra note 

116.

119 See FINRA, Dispute Resolution Statistics, https://www.

finra.org/arbitration-mediation/dispute-resolution-statistics. 

120 See FINRA Regulatory Notice 22-05 (Feb. 15, 2022) 

(hereinafter FINRA Reg. Notice 22-05), https://www.finra.

org/sites/default/files/2022-02/Regulatory-Notice-22-05.

pdf.

121 FINRA, Rule 2165 (2022), https://www.finra.org/rulesguidance/rulebooks/finra-rules/2165.

122 FINRA, Rule 2165(a) (2022) https://www.finra.org/rulesguidance/rulebooks/finra-rules/2165.

123 FINRA Reg. Notice 22-05, at p. 3.

124 Id. at p. 4.

125 Id. 

126 Id.

127 Id. at p. 1.

128 Press Release, SEC, SEC Announces Pilot Securities 

Arbitration Clinic to Help Small Investors—Levitt 

Responds to Concerns Voiced at Town Meetings, 97-101 

(Nov. 12, 1997), https://www.sec.gov/news/press/

pressarchive/1997/97-101.txt.
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 47

129 For more information on the significance of law school 

investor advocacy clinics to retail investors, see Report on

Activities, Fiscal Year 2019, at 33-34.

130 For an overview of the Law School Clinic Outreach 

Program (LSCOP), see SEC, Off. of the Inv. Advoc., 

Report on Objectives, Fiscal Year 2021, at 33, https://

www.sec.gov/files/sec-office-investor-advocate-report-onobjectives-fy2021.pdf. 

131 For a timeline highlighting the Ombudsman’s formal 

outreach and engagement efforts from the start of the 

LSCOP in October 2016 through June 2019, see id. at 

34-35. 

132 Participating law schools included (in alphabetical order): 

Benjamin N. Cardozo School of Law, Cornell Law School, 

Fordham University School of Law, Howard University 

School of Law, New York Law School, Northwestern 

Pritzker School of Law, Pace University School of Law, 

Seton Hall University School of Law, St. John’s University 

School of Law, University of Miami School of Law and the 

University of Pittsburgh School of Law.

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

134 Id. 

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

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

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

138 According to Exchange Act Section 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.”

139 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). 

140 SEC, Recommendation of the Investor Advisory Committee 

Regarding Individual Retirement Accounts (Dec. 2, 2021), 

https://www.sec.gov/spotlight/investor-advisory-committee2012/20211202-ira-recommendation.pdf. 

141 SEC, Recommendation of the Investor Advisory Committee 

Regarding Recommendation of the Investor-as-Owner 

Subcommittee on Special Purpose Acquisition Companies 

(Sept. 9, 2021), https://www.sec.gov/spotlight/investoradvisory-committee-2012/draft-recommendation-of-the-iapand-iao-subcommittees-on-spacs-082621.pdf.

142 See Special Purpose Acquisition Companies, Shell 

Companies, and Projections, Securities Act Release No. 

33-11048 (Mar. 30, 2022) (proposing release).

143 SEC, Recommendation of the Investor Advisory Committee 

Regarding Recommendation of the Investor-as-Owner 

Subcommittee on Rule 10b5-1 Plans (Sept. 9, 2021), https://

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

draft-recommendation-of-the-iao-subcommittee-on-10b5-1-

plans-082621.pdf. 

144 See Rule 10b5-1 and Insider Trading, Securities Act 

Release No. 33-11013, 87 Fed. Reg. 8686 (Jan. 13, 2022) 

(proposing release).

145 SEC, Recommendation of the Investor Advisory Committee 

Regarding Minority and Underserved Inclusion in 

Investment and Financial Services (Mar. 11, 2021), https://

www.sec.gov/spotlight/investor-advisory-committee2012/20210311-minority-and-underserved-inclusionrecommendation.pdf. 

146 SEC, Recommendation of the Investor Advisory Committee 

Regarding Recommendation of the Market Structure 

Subcommittee on Credit Rating Agencies (Mar. 11, 2021), 

https://www.sec.gov/spotlight/investor-advisory-committee2012/20210311-credit-rating-agencies-recommendation.

pdf. 

147 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/accounting-andfinancial-disclosure.pdf. 

148 See Coronavirus (COVID-19)—Disclosure Considerations 

Regarding Operations, Liquidity, and Capital Resources, 

SEC Div. of Corp. Fin. Disclosure Guidance Topic No. 9A 

(June 23, 2020), https://www.sec.gov/corpfin/covid-19-

disclosure-considerations. 

149 See Julie Steinberg, FASB to Explore Greater Disclosure of 

Supply-Chain Financing, Wall St. J. (Oct. 22, 2020, 6:05 

AM ET), https://www.wsj.com/articles/fasb-to-exploregreater-disclosure-of-supply-chain-financing-11603361147. 

150 See Management’s Discussion and Analysis, Selected 

Financial Data, and Supplementary Financial Information, 

Securities Act Release No. 10890 (Nov. 19, 2020), https://

www.sec.gov/rules/final/2020/33-10890.pdf.

151 See FASB, Exposure Draft, Disclosure of Supplier Finance 

Program Obligations (Dec. 20, 2021) https://www.fasb.

org/page/getarticle?uid=fasb_Media_Advisory_12-20-21_

Body_0228221200. 
48 | OFFICE OF THE INVESTOR ADVOCATE

152 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-advisory-committee-2012/

esg-disclosure.pdf. 

153 Statement from Allison Herren Lee, Acting Chair, SEC, 

Statement on the Review of Climate-Related Disclosure 

(Feb. 24, 2021), https://www.sec.gov/news/publicstatement/lee-statement-review-climate-related-disclosure.

154 Press Release, SEC, Division of Examinations Announces 

2021 Examination Priorities (Mar. 3, 2021), https://www.

sec.gov/news/press-release/2021-39.

155 Press Release, SEC, SEC Announces Enforcement Task 

Force Focused on Climate and ESG Issues (Mar. 4, 2021), 

https://www.sec.gov/news/press-release/2021-42.

156 Statement from Allison Herren Lee, Acting Chair, SEC, 

Public Input Welcomed on Climate Change Disclosures 

(Mar. 15, 2021), https://www.sec.gov/news/publicstatement/lee-climate-change-disclosures.

157 See The Enhancement and Standardization of ClimateRelated Disclosures for Investors, Securities Act Release 

No. 33-11042, 87 Fed. Reg. 21334, (Mar. 21, 2022) 

(proposing release).

158 See ESG Release, supra note 64.

159 SEC, Recommendation of the Investor Advisory Committee 

Regarding Recommendation on Disclosure Effectiveness 

(May 21, 2020), https://www.sec.gov/spotlight/investoradvisory-committee-2012/disclosure-effectiveness.pdf. 

160 See Tailored Shareholder Reports, Treatment of Annual 

Prospectus Updates for Existing Investors, and Improved 

Fee and Risk Disclosure for Mutual Funds and ExchangeTraded Funds; Fee Information in Investment Company 

Advertisements, Investment Company Act Release Act 

No. 33963 (Aug. 5, 2020), https://www.sec.gov/rules/

proposed/2020/33-10814.pdf. 

161 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-advisorsandshareholder-proposals.pdf. 

162 See Exemptions from the Proxy Rules for Proxy Voting 

Advice, Release No. 34-89372 (July 22, 2020) (adopting 

release); see also Amendments to Exemptions from 

the Proxy Rules for Proxy Voting Advice, Release No. 

34-87457, 84 Fed. Reg. 66518 (Dec. 4, 2019) (proposing 

release).

163 See Procedural Requirements and Resubmission Thresholds 

Under Exchange Act Rule 14a-8, Release No. 34-89964 

(Sept. 23, 2020).

164 Statement from Gary Gensler, Chairman, SEC, Statement 

on the Application of the Proxy Rules to Proxy Voting 

Advice (June 1, 2021), https://www.sec.gov/news/publicstatement/gensler-proxy-2021-06-01.

165 SEC, Div. of Corp. Fin., Statement on Compliance with the 

Commission’s 2019 Interpretation and Guidance Regarding 

the Applicability of the Proxy Rules to Proxy Voting Advice 

and Amended Rules 14a-1(1), 14a-2(b), 14a-9 (June 1, 

2021) [hereinafter SEC Staff Statement on Proxy Rules], 

https://www.sec.gov/news/public-statement/corp-fin-proxyrules-2021-06-01.

166 SEC, Recommendation of the Investor Advisory Committee 

Regarding Exchange Rebate Tier Disclosure (Jan. 24, 

2020), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/exchange-rebate-tier-disclosure.pdf. 

167 SEC, Recommendation of the Investor Advisory 

Committee: Proxy Plumbing (Sept. 5, 2019), https://www.

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

iac-recommendation-proxy-plumbing.pdf. 

168 See Press Release, SEC, SEC Reopens Comment Period 

for Universal Proxy (Apr. 16, 2021), https://www.sec.gov/

news/press-release/2021-64.

169 See Universal Proxy, Exchange Act Release No. 93596; 

Investment Company Act Release No. 34419, https://www.

sec.gov/rules/final/2021/34-93596.pdf. 

170 SEC, Recommendation of the Investor Advisory 

Committee: Structural Changes to the U.S. Capital Markets 

Re: Investment Research in a Post-MiFID II World (July 

25, 2019), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/investment-research-post-mfid-ii-world.

pdf. 

171 See Press Release, SEC, SEC Announces Extension 

of Temporary Measure to Facilitate Cross-Border 

Implementation of the European Union’s MiFID II’s 

Research Provisions (Nov. 4, 2019), https://www.sec.gov/

news/press-release/2019-229.

172 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. 

173 See Modernization of Regulation S-K Items 101, 103, and 

105, Exchange Act Release No. 89670, 85 Fed. Reg. 63726 

(Oct. 8, 2020).
REPORT ON OBJECTIVES: FISCAL YEAR 2023 | 49

174 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/investoradvisory-committee-2012/recommendation-transaction-feepilot-for-nms-stocks.pdf.

175 SEC, Transaction Fee Pilot for NMS Stock, Release No. 

34-84875 (Dec. 19, 2018), https://www.sec.gov/rules/

final/2018/34-84875.pdf.

176 See NYSE L.L.C. v. SEC, 962 F.3d 541 (D.C. Cir. 2020).

177 SEC, Recommendation of the Investor Advisory 

Committee: Financial Support for Law School Clinics that 

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

spotlight/investor-advisory-committee-2012/law-clinicsrecommendation.pdf.

178 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/investor-advisory-committee-2012/

recommendation-on-dual-class-shares.pdf.

179 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. 

180 See Request for Comment on Fund Retail Investor 

Experience and Disclosure, Securities Act Release No. 

10503, Exchange Act Release No. 83376, Investment 

Company Act Release No. 33113, 83 Fed. Reg. 26891 (June 

11, 2018).

181 See Updated Disclosure Requirements and Summary 

Prospectus for Variable Annuity and Variable Life Insurance 

Contracts, Securities Act Release No. 10569, Exchange Act 

Release No. 84508, Investment Company Act Release No. 

33286, 83 Fed. Reg. 61730 (Nov. 30, 2018).

182 See Updated Disclosure Requirements and Summary 

Prospectus for Variable Annuity and Variable Life Insurance 

Contracts, Securities Act Release No. 10765, Exchange Act 

Release No. 88358, Investment Company Act Release No. 

33814, 85 Fed. Reg. 25964 (Mar. 11, 2020).

183 SEC, Recommendation of the Investor Advisory 

Committee: Shortening the Trade Settlement Cycle in U.S. 

Financial Markets, February 12, 2015, http://www.sec.gov/

spotlight/investor-advisorycommittee-2012/settlementcycle-recommendationfinal.pdf. 

184 See Proposed Rule, Shortening the Settlement Cycle, 

Exchange Act Release No. 94196 (Feb. 9, 2022), 87 Fed. 

Reg. 10436 (Feb. 24, 2022), https://www.federalregister.

gov/d/2022-03143. 

185 SEC, Recommendation of the Investor Advisory 

Committee: Accredited Investor Definition (Oct. 9, 

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

pdf. 

186 See Accredited Investor Definition, Securities Act Release 

No. 10824, 85 Fed. Reg. 64234 (Oct. 9, 2020) (adopting 

release); see also Amending the “Accredited Investor” 

Definition, Securities Act Release No. 10734, 85 Fed. Reg. 

2574 (Jan. 15, 2020) (proposing release).

187 SEC, Recommendations of the Investor Advisory 

Committee: Impartiality in the Disclosure of Preliminary 

Voting Results (Oct. 9, 2014), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/impartialitydisclosure-prelim-voting-results.pdf. 

188 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/universalproxy-recommendation-072613.pdf. 

189 See Universal Proxy, Exchange Act Release No. 79164, 

Investment Company Act Release No. 32339, 81 Fed. Reg. 

79122 (Nov. 10, 2016).

190 See SEC Staff Statement on Proxy Rules, supra note 165.

191 See Universal Proxy, Exchange Act Release No. 93596; 

Investment Company Act Release No. 34419, 86 Fed. 

Reg. 68330 (Nov. 17, 2021), https://www.sec.gov/rules/

final/2021/34-93596.pdf. 

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549