Report on 

Objectives

FISCAL YEAR 2024

REPORT ON OBJECTIVES: FISCAL YEAR 2024 | iii

OFFICE OF THE INVESTOR ADVOCATE

REPORT ON OBJECTIVES

FISCAL YEAR 2024

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 This 

report contains a summary of the Investor Advocate’s primary objectives for Fiscal Year 2024, 

beginning October 1, 2023.

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 2024 | v

CONTENTS

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

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

Assisting Retail Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Identifying Areas in Which Investors Would Benefit from Regulatory Changes. . . . . . . . . 3

Identifying Problems with Financial Service Providers and Investment Products . . . . . . . . 3

Analyzing the Potential Impact on Investors of Proposed Rules and Regulations. . . . . . . . 3

Proposing Appropriate Changes to the Commission and to Congress . . . . . . . . . . . . . . 4

Supporting the Investor Advisory Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

POLICY AGENDA FOR FISCAL YEAR 2024. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

SEC Policies and SRO Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Investor Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Office of Investor Research. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

OMBUDS’ REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Ombuds Role and Standards of Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Streamlined Communications With Retail Investors . . . . . . . . . . . . . . . . . . . . . . . . . 19

Service by the Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Areas of Interest and Importance to Retail Investors . . . . . . . . . . . . . . . . . . . . . . . . .23

Acting in the Interests of Retail Investors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Ombuds Outreach and Engagement Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Objectives and Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

SUMMARY OF INVESTOR ADVISORY COMMITTEE RECOMMENDATIONS 

AND SEC RESPONSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

ENDNOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 1

MESSAGE FROM THE 

INVESTOR ADVOCATE

Earlier this year, I 

was honored to be 

appointed as the 

second Investor 

Advocate of the 

U.S. Securities 

and Exchange 

Commission 

(SEC). As the 

new Director of 

the Office of the 

Investor Advocate 

and as an investor myself, I owe a debt of gratitude 

to Rick Fleming, who served for eight years as 

the first individual appointed to this role. Rick’s 

dedication to public service, thoughtful approach 

to policy questions, and commitment to the fair 

treatment of investors are traits I aspire to emulate 

in my tenure as the Investor Advocate. I also wish 

to acknowledge Marc Sharma, Chief Counsel of 

the Office of the Investor Advocate, who led the 

Office for more than six months after Rick Fleming 

stepped down.

The SEC has a three-part mission: to protect 

investors, to maintain fair, orderly, and efficient 

markets, and to facilitate capital formation. These 

three objectives are interrelated, and protecting 

investors provides a firm foundation for markets 

to perform at their best. Catastrophic failures 

to adequately protect investors led Congress to 

establish the SEC in 1934. Eighty years later, the 

commitment to investor protection was accelerated 

with the creation and formation of the Office of 

the Investor Advocate. In 2014, the Office was 

operational, following the passage of an act of 

Congress in 2010, to provide retail investors a 

dedicated voice inside the Commission. In the role 

of Investor Advocate, I am privileged to lead an 

office whose main objective is to identify, analyze, 

and address the concerns of investors. 

First among the statutorily mandated functions of 

this Office is the directive to assist retail investors in 

resolving significant problems such investors may 

have with the Commission or with self-regulatory 

organizations (SROs). To fulfill this function, it 

is our intention to strengthen our efforts to help 

investors who seek our assistance with problems of 

this nature. In pursuit of providing the best service 

possible, Stacy Puente has been appointed as the 

new Ombudsman (Ombuds). She brings extensive 

securities law experience and a deep commitment 

to assisting individuals in her new role. Additional 
2 | OFFICE OF THE INVESTOR ADVOCATE

staff have also been recruited to help ensure the 

appropriate attention and service is provided to 

investors who contact the Ombuds Office. In 

Fiscal Year 2024, we will implement improvements 

in the technology used to assist investors. The 

software updates aim to streamline the investor 

user experience, and make our Ombuds service 

more efficient. By prioritizing and resourcing these 

actions, we signal our unwavering commitment to 

serving retail investors.

Congress also directed the Office of the Investor 

Advocate to identify problems investors may have 

with financial service providers and investment 

products, as well as areas in which investors would 

benefit from changes in the Commission’s or SROs’ 

regulations and policies. To ensure that retail 

investors are at the center of our efforts to meet 

these obligations, we will place a renewed focus on 

engaging directly with investors and their representatives, especially those who do not routinely 

communicate with financial regulators. We will 

also continue to enhance our research strategies, 

which offer evidence-based solutions to the 

challenges—both old and new—that retail investors 

face in a rapidly changing investment environment. 

The robust regulatory agenda of the Commission 

provides our Office a roadmap of proposals to 

analyze from the perspective of retail investors. As 

detailed below, our Office is currently evaluating 

numerous pending and forthcoming proposals 

of significance to retail investors, informed by 

our research and investor engagements. We will 

continue to evaluate such proposals in the next 

fiscal year.

As the daughter of immigrants who were not 

always free to enjoy the rights and opportunities 

that are unique to our nation, I am mindful 

that preserving and promoting those rights and 

opportunities demand our daily attention. Our 

capital markets are the envy of the world, and 

the financial freedom they offer—but do not 

guarantee—give millions of investors hope. In 

the role I have been privileged to assume, I am 

committed to listen to the experiences of investors, 

promote their interests, and encourage the 

conditions that can foster financial success.

I am pleased to submit this Report on Objectives 

for Fiscal Year 2024 on behalf of the Office of the 

Investor Advocate, and I welcome any questions 

from Members of Congress.

Respectfully Submitted,

Cristina Begoña Martin Firvida

Investor Advocate
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 3

OBJECTIVES OF THE 

INVESTOR ADVOCATE

ASSISTING RETAIL 

INVESTORS

The Investor Advocate is responsible for assisting 

retail investors in resolving significant problems 

that investors may have with the Commission or 

with self-regulatory organizations (SROs).4 To help 

accomplish this objective, the Investor Advocate 

has appointed an Ombuds to, among other things, 

act as the primary liaison between the Commission 

and retail investors in resolving problems that retail 

investors may have with the Commission or with 

SROs.5 The Ombuds’ Report is included within this 

Report on Objectives.6

IDENTIFYING AREAS IN WHICH 

INVESTORS WOULD BENEFIT 

FROM REGULATORY CHANGES

The Investor Advocate also identifies 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 review the rules and regulations 

governing existing equity market structure to 

determine whether any regulatory changes to that 

framework would benefit investors. These and other 

concerns are discussed in greater detail below in the 

section entitled SEC Policies and SRO Filings.

IDENTIFYING PROBLEMS WITH 

FINANCIAL SERVICE PROVIDERS 

AND INVESTMENT PRODUCTS

The Investor Advocate also is responsible for 

identifying 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. The Investor Advocate 

identifies these problems in the Reports on Activities 

filed every December.

ANALYZING THE POTENTIAL IMPACT 

ON INVESTORS OF PROPOSED 

RULES AND REGULATIONS

The Investor Advocate analyzes the potential 

impact on investors of proposed regulations of the 

Commission and proposed rules of SROs on an 

ongoing basis.9 In Fiscal Year (FY) 2024, the Office 

will review significant rulemakings of the Commission 

and SROs and will communicate with investors and 

their representatives to determine the potential impact 

of proposed rules. In the section entitled Investor 

Engagement, we expand upon our plan to engage 

with investors and their representatives. In addition, 

we will study investor behavior and utilize a variety 

of research methods to examine the efficacy of 

certain policy proposals. For example, we will study 

the effectiveness of various disclosures that are 
4 | OFFICE OF THE INVESTOR ADVOCATE

provided to retail investors. Included in the section 

Office of Investor Research are descriptions of 

our research methods. In our December Report 

on Activities, we will describe the findings of our 

various research projects.

PROPOSING APPROPRIATE 

CHANGES TO THE COMMISSION 

AND TO CONGRESS

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 SEC Policies and SRO Filings, 

as set forth below, we may recommend to the 

Commission and/or to Congress changes that will 

promote the interests of investors.

SUPPORTING THE 

INVESTOR ADVISORY 

COMMITTEE

Exchange Act Section 39 establishes the Investor 

Advisory Committee (IAC).11 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 FY 2024, as we have done since 

2014. The section entitled Summary of Investor 

Advisory Committee Recommendations and SEC 

Responses summarizes recommendations the IAC 

has made since June 2022, and indicates the SEC’s 

responses to them. Although we are not required to 

report IAC recommendations and SEC responses, 

historically, we have done so. 
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 5

POLICY AGENDA FOR 

FISCAL YEAR 2024

The objectives of the Office of the Investor 

Advocate (OIAD) are broad in scope. Among the 

many activities that we undertake to satisfy those 

objectives, we evaluate and, where applicable, 

provide recommendations on Commission 

rulemakings and SRO filings. We communicate 

regularly with investors and their representatives 

and seek their feedback on investor-focused 

concerns. We also observe and report out on 

investor behavior and trends. In fulfilling the 

responsibilities of our Office, we approach our 

work with investor interests foremost.

SEC POLICIES AND SRO FILINGS

After discussions with numerous knowledgeable 

parties, both inside and outside the Commission, 

and after due consideration, the Office will focus on 

the following policies and filings during FY 2024:

§	Broker and Adviser Conduct

§	Private Markets

§	Equity Market Structure

§	Outsourcing by Investment Advisers

§	Mutual Funds: Transaction Costs and Dilution

Broker and Adviser Conduct

Retail investors typically access the securities 

markets through relationships with investment 

advisers and/or broker-dealers. Because investors 

are not homogenous, they benefit from the 

availability of diverse types of advice relationships 

and investment products and services. Our Office 

advocates to improve the quality and transparency 

of these relationships, to bring regulations and 

disclosures in line with reasonable investor 

expectations, and to preserve investor access 

(in terms of choice and cost) to a variety of 

investment services and products.

Since the implementation of Regulation Best 

Interest (Reg BI) in 2020, we have monitored 

how the Commission and the Financial Industry 

Regulatory Authority, Inc. (FINRA) use this 

regulatory tool to address violative conduct in 

the brokerage business and otherwise help to 

improve outcomes for retail customers. As our 

Office asserted at the time, the elimination of sales 

contests, the enhanced disclosures of conflicts of 

interest, and other investor-friendly improvements 

benefit retail investors.13 We believe that Reg BI 

should be enforced rigorously to help ensure that 

broker behavior matches customers’ expectations 

with respect to receiving investment advice. 
6 | OFFICE OF THE INVESTOR ADVOCATE

Similarly, in connection with the Commission’s 

interpretation regarding the standard of conduct for 

investment advisers, we have monitored subsequent 

Commission communications addressing the duty 

of care enforced under the Investment Advisers 

Act of 1940 (Advisers Act) governing registered 

investment advisers. Although the specific 

application of Reg BI and the investment adviser 

fiduciary standard may differ in some respects and 

be triggered at different times, in the staff’s view, 

they generally yield substantially similar results 

in terms of the ultimate responsibilities that 

registered brokers and investment advisers owe 

to retail investors.14

With more and more discount brokers facilitating 

retail investor trading through mobile devices and 

applications, there are a host of important policy 

questions to consider. Although these technological 

developments have increased investor access and 

choice, they have also created new business models 

and conflicts of interest. These trading platforms 

typically offer customers zero-commission trades, 

with revenues to the firm often coming from the 

market participants who accept the trades in an 

arrangement known as “payment for order flow.” 

In a sense, because the retail investor is paying 

nothing directly to the broker-dealer, the investor 

is both the product and the customer. In light of 

these developments, it is important to consider 

both: (1) how these digital platforms fit within 

the Reg BI framework concerning investment 

recommendations; and (2) to the extent that this 

new digital engagement does not implicate Reg BI, 

how other regulatory tools might help ensure that 

retail investors are the primary beneficiaries of this 

new technology.15

Similarly, to the extent that investment advisers are 

now providing investment advice to retail clients 

through digital engagement, the Commission 

has already made clear that it expects any such 

advice to be consistent with the adviser’s fiduciary 

duty.16 Registered advisers must also continue to 

comply with various other obligations imposed by 

rules adopted under the Advisers Act, including 

disclosure requirements, reporting requirements, 

marketing requirements, compliance program 

obligations, supervision requirements and 

insider trading procedures, and recordkeeping 

requirements.17 We will continue to monitor how 

advisers meet their existing fiduciary obligations 

in light of technological changes, and we will 

continue to advocate for strengthened investor 

protection measures should new practices threaten 

existing protections.

We were encouraged to see the Commission’s 

regulatory agenda, as made public pursuant to 

the Regulatory Flexibility Act, include rulemaking 

addressing brokers’ and advisers’ digital engagement 

practices for retail investors.18 As noted above, 

however, the use of predictive data analytics, 

differential marketing, and behavior prompts may 

implicate Reg BI or an adviser’s fiduciary duty. 

Even where enhanced content, presentations, 

and tailoring do not do so, it is appropriate for 

regulators to consider enhancements to their 

oversight. In FY 2024, we intend to engage with 

the Commission and interested parties on the 

fundamental question of how best to enhance 

investor protection in this space.
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 7

The Commission has also proposed enhancements 

to broker order routing behavior, an area where 

investors, both retail and institutional, largely 

depend upon their brokers’ expertise to implement 

trades.19 The proposed rules intend to enhance 

the existing regulatory framework maintained by 

FINRA and the Municipal Securities Rulemaking 

Board (MSRB). A broker’s duty of best execution 

requires customers’ trades to be executed at the 

most favorable terms reasonably available under 

the circumstances, but the details underlying the 

execution are of particular importance. Our Office 

continues to review the public comments received 

on proposed Regulation Best Execution,20 and we 

look forward to working with the Commission 

to determine the most effective way to improve 

investor outcomes.

FINRA, as the SRO for broker-dealers, plays many 

additional roles in regulation and oversight. Issues 

related to broker conduct, including during the 

customer arbitration process and in its oversight 

of trading in the over-the-counter equity market, 

are the frequent subject of complaints that 

investors bring to the attention of SEC Ombuds 

Stacy Puente. The Ombuds’ Office was also 

instrumental in analyzing the customer arbitration 

process for investment advisers this year, and will 

likely continue to focus on the issue. Thus, other 

important issues involving broker and adviser 

conduct are included below in the Ombuds’ 

Report. Ombuds Puente and her staff will continue 

to lead our dialogue with the Commission and 

FINRA to address these issues on behalf of 

investors during FY 2024.

Finally, we are considering the comments received 

in connection with the Commission’s cybersecurity 

proposals, with a particular focus on amendments 

to Regulation S-P proposed in March 2023.21

Cybersecurity breaches seem to have become more 

prevalent recently, and the proposed amendments 

to Regulation S-P are intended to enhance the 

protection of customer information by, among 

other things, requiring broker-dealers, investment 

companies, registered investment advisers, and 

transfer agents (collectively, “covered institutions”) 

to provide notice to individuals affected by certain 

types of data breaches that may put them at risk 

of identity theft or other harm.22 More specifically, 

the proposed amendments would: require 

covered institutions to adopt written policies and 

procedures for an incident response program to 

address unauthorized access to or use of customer 

information; require covered institutions to have 

written policies and procedures to provide timely 

notification to affected individuals whose sensitive 

customer information was or is reasonably likely to 

have been accessed or used without authorization; 

and broaden the scope of information covered 

under Regulation S-P.23

Private Markets

Over the past 15 years, private markets in the 

United States have flourished, with the amount 

of capital raised in these markets during this 

time far surpassing the amount of capital raised 

in public registered offerings.24 According to 

one estimate, total global private market assets 

under management reached $11.7 trillion as of 

June 2022.25 Private markets have become a vital 

avenue for companies seeking to raise capital and 
8 | OFFICE OF THE INVESTOR ADVOCATE

for investors seeking investment opportunities 

and portfolio diversification.26 However, investing 

in the private markets may involve a number of 

heightened risks compared to investing in the public 

markets, particularly for retail investors. Those 

risks may include reduced, incomplete or unreliable 

disclosure, illiquidity, and greater risk of fraud and/

or investment loss.27

Recently, a panel discussion at the Investor 

Advisory Committee’s March 2023 meeting 

highlighted various factors contributing to the 

growth of the private markets, the impact of 

regulatory differences between the private and 

public markets, and the risks faced by retail and 

institutional investors in the private markets.28

Among other things, the panelists explored the 

performance of private investments (such as private 

equity), the current regulatory environment, 

and investor protection concerns in the private 

markets.29 The panelists also offered a range of 

views on different approaches to improving the 

regulation of the private markets.30

In the past, we have expressed concern regarding 

the continued shift of capital raising from public 

markets to private markets.31 Due to a series of 

legislative and regulatory actions over time, a 

company arguably can now meet most, if not all, 

of its capital-raising needs, as a practical matter, 

without ever having to go through the registration 

process for securities offerings that is a central 

underpinning of the Securities Act of 1933.32

These changes, which include an expansion of the 

exemptions from the registration process, have 

made it easier for many companies to fund their 

growth through capital raising on a much larger 

scale without necessitating the public disclosure 

of information that would otherwise be required 

under the securities laws. Some commentators 

point to this development as a factor in the decline 

in the number of initial public offerings and public 

companies in the United States over the years.33

Another reason behind the continued growth 

of private markets is the increasing number of 

investors who qualify as “accredited investors” 

and are thus eligible to invest in private offerings 

under a number of offering exemptions.34

Individuals qualify as accredited investors based 

on certain wealth35 and income36 thresholds, which 

have not been adjusted for inflation since they were 

adopted in the 1980s, or through other measures 

serving as a proxy for financial sophistication.37

As noted in a prior report,38 however, we recognize 

that the accredited investor definition has been 

a contested issue, with some commentators 

supportive of an expanded definition, others 

advocating for a more restrictive definition (such 

as higher wealth and/or income thresholds), 

and still others suggesting that the definition be 

eliminated altogether so that anyone inclined to do 

so can invest in private offerings.39

In managing trillions of dollars in private fund 

assets, registered private fund advisers also play a 

critical role in the private markets.40 In February 

2022, the Commission proposed new rules and 

amendments intended to enhance the regulation of 

private fund advisers and to protect private fund 

investors by increasing transparency, competition, 

and efficiency in the private fund space.41 The 

proposed reforms are designed to protect private 

fund investors by increasing their visibility into 
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 9

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

During FY 2024, the Office will continue to engage 

in outreach to investors and market participants 

regarding the issues surrounding the private 

markets, such as accredited investor status, the 

informational needs of investors, transparency 

in these markets, and the interplay between the 

private and public markets, and we will continue 

to share feedback internally with our Commission 

colleagues. The Commission’s Regulatory 

Flexibility Act Agenda currently includes several 

rulemaking projects relating to private markets and 

capital raising,43 and we will endeavor to provide a 

voice for investors as the Commission contemplates 

potential changes in this area. We will also continue 

to monitor pending legislative proposals in 

Congress that address various aspects of the private 

markets and evaluate the impact that these bills 

would have on investors.44

Equity Market Structure

Like others at the Commission, our Office 

is sensitive to the fact that equity market 

structure issues are complex and require a broad 

understanding of statutory requirements, economic 

principles, and practical considerations. However, 

while competing interests may need to be balanced 

for markets to work efficiently, our Office has long 

focused on one overriding concern as we examine 

these issues: whether the equity market as it exists 

today is fair for investors, or whether it prioritizes 

the interests of other market participants instead, 

to the disadvantage of investors. To evaluate this 

concern, we consider whether the incentives in 

the current structure tend to favor or disfavor 

long-term investors, and what changes could 

improve the investor experience.

In December 2022, the Commission proposed 

a set of four significant rulemaking intended to 

improve the environment for retail and institutional 

trading in the modern market.45The rules would: 

(1) establish a Commission-level best execution 

regulatory framework (as discussed above); 

(2) require certain retail orders to be exposed to 

competition in open public auctions; (3) amend 

existing rules to narrow “tick sizes” for quoting 

and trading certain stocks, lower market access 

fee caps, and accelerate transparent pricing; and 

(4) amend execution quality disclosure 

requirements for market centers. Through the 

perspective of our overriding concern, we are 

considering how these proposed changes could, 

in whole or in part, help or harm retail and 

institutional investors.

Our Office’s analysis can draw from a variety 

of sources. The public comment period for these 

proposals closed in March 2023, and our Office 

continues to consider the helpful input from both 

retail and institutional investors in evaluating 

what enhancements or amendments could 

improve the proposals. 

There are also areas that could benefit from our 

Office’s own behavioral research, to examine 

the ways that investors are able to identify and 

incorporate information into their decisions. 

The Commission has, for example, asked for 
10 | OFFICE OF THE INVESTOR ADVOCATE

public thoughts on ways the Commission could 

improve the accessibility of the execution quality 

disclosure reports, which are intended to increase 

transparency for investors and facilitate the ability 

to compare. As proposed, this rule could require 

over 350 market centers to each publish humanreadable, monthly reports on separate public 

websites.46 The search costs for anyone looking 

to compare and contrast all of the various reports 

could be prohibitive. In this area, we intend to 

encourage the Commission to consider not only 

how the presentation of the information on these 

reports can best facilitate retail investor decisionmaking, but also how centralization of the reports 

themselves may factor into their usefulness.47

We also continue to support efforts to modernize 

the overall infrastructure for the collection, 

consolidation, and dissemination of market data 

for stocks.48Retail investors benefit from the 

improved content and competitive infrastructure 

for quotation and trading data, either directly 

when trading on mobile devices and applications 

or indirectly as participants in mutual and pension 

funds. In September 2022, the Commission 

disapproved an SRO proposal that would 

have provided key upgrades to the content and 

infrastructure for “core data” consolidated and 

widely distributed, but also would have included 

fees that commenters, including investors, argued 

were flawed and lacked justification.49 The 

exchanges and FINRA need to submit another fee 

proposal, and our Office will work to ensure that 

the final rule addresses commenters’ concerns.

Many retail investors have expressed concern 

regarding the practice of short selling. We intend 

to support the Commission’s efforts to enhance 

transparency in short selling50 as well as the opaque 

network of stock lending and borrowing that 

facilitates the practice.51 Maintaining a repository 

of relevant data could improve the Commission’s 

ability to monitor this area of the market in real 

time. Further, we will consider whether guidance 

concerning what constitutes a broker-dealer’s 

reasonable basis for the “locate” requirement for 

heavily shorted companies should be considered to 

address investor concerns in this area.

In addition to evaluating rulemaking by the 

Commission during FY 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 March 

2023, the Commission instituted proceedings to 

determine whether to approve or disapprove a 

FINRA proposal to allow a new entrant to post 

stock quotes on its Alternative Display Facility in 

a manner that would allow the information to be 

included in consolidated market data.52 Given the 

new entrant proposes to use a novel, intentionally 

delayed matching process, commenters have 

expressed concern about whether the quotations 

from the system would be consistent with 

Regulation NMS’s definition of an “automated 

quotation,” and whether the integration into 

national market system would lead to materially 

worse executions for investors.53 During the 

upcoming fiscal year, we will continue to monitor 

this and other SRO filings, and consider how best 

to advance the interests of investors during the 

public process.
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 11

Outsourcing by Investment Advisers

In October 2022, the Commission proposed 

to prohibit registered investment advisers from 

outsourcing certain services and functions to thirdparty service providers without conducting due 

diligence and monitoring of the service providers.54

Like businesses in many other industries, investment 

advisers have increasingly engaged service providers 

to support or perform certain functions or services 

traditionally performed in-house.55 The Commission 

acknowledges in the outsourcing proposal 

referenced above (Outsourcing Proposal) that, 

among other benefits, service providers may give 

an adviser access to certain specialized expertise, 

reduce risks of keeping a function in-house that the 

adviser is not equipped to perform, or offer cost 

savings that may be passed on to investors.56 The 

Commission also notes, however, that an adviser’s 

clients could be significantly harmed if the adviser 

outsources a function or service without adequate 

adviser oversight.57

The Advisers Act establishes a federal fiduciary 

duty for investment advisers that comprises a 

duty of loyalty and a duty of care and is made 

enforceable by the antifraud provisions of the 

Advisers Act.58 This combination of obligations 

has been characterized as requiring the investment 

adviser to act in the best interests of its client at 

all times.59 Outsourcing a particular function or 

service does not alter or diminish an adviser’s 

obligations under the Advisers Act and the other 

federal securities laws. Despite investment advisers’ 

fiduciary obligations, however, the Outsourcing 

Proposal cites an increase in issues related to 

outsourcing and inadequate adviser oversight.60

In an effort to address these issues, the Outsourcing 

Proposal would establish a regulatory framework 

requiring advisers to comply with specific elements 

as part of a due diligence and monitoring process 

to oversee the provision of certain “covered 

functions.” The proposal defines a “covered 

function” as “(1) a function or service that is 

necessary for the adviser to provide its investment 

advisory services in compliance with the Federal 

securities laws, and (2) that, if not performed or 

performed negligently, would be reasonably likely 

to cause a material negative impact on the adviser’s 

clients or on the adviser’s ability to provide 

investment advisory services.” The determination 

of what is a covered function would depend on 

facts and circumstances, as the proposed rule is 

meant to encompass functions or services that are 

necessary for a particular adviser to provide its 

investment advisory services.61 The proposal lists 

examples of potential covered function categories 

an adviser may wish to consider, however, such as: 

Adviser / Subadviser; Client Services; Cybersecurity; 

Investment Guideline / Restriction Compliance; 

Investment Risk; Portfolio Management (excluding 

Adviser / Subadviser); Portfolio Accounting; 

Pricing; Reconciliation; Regulatory Compliance; 

Trading Desk; Trade Communication and 

Allocation; and Valuation.62

The Outsourcing Proposal would require an 

adviser, prior to retaining a service provider 

to perform a covered function, to reasonably 

identify and determine through due diligence that 

outsourcing the covered function to that service 

provider would be appropriate by considering:

§	The nature and scope of the covered function;

§	Potential risks resulting from the service 

provider performing the covered function, 

including how to mitigate and manage 

such risks;
12 | OFFICE OF THE INVESTOR ADVOCATE

§	The service provider’s competence, capacity, 

and resources necessary to perform the 

covered function;

§	The service provider’s material subcontracting 

arrangements related to the covered function;

§	Coordination with the service provider for 

federal securities law compliance; and

§	The orderly termination of the performance 

of the covered function.63

The proposal also would require the adviser 

to monitor the service provider’s performance 

and reassess the selection of the service provider, 

and to comply with certain reporting and 

recordkeeping requirements.64

The Outsourcing Proposal has encountered 

significant criticism, both within and outside 

the Commission. For instance, some commenters 

have challenged the proposal, indicating, 

among other things, that the Commission has 

underestimated the cost burden of the Outsourcing 

Proposal. These commenters argue that increased 

costs are likely to be passed on to adviser clients, 

ultimately harming investors.65

While remaining cognizant of investment advisers’ 

fiduciary duty obligations, we also believe strong 

oversight of advisers’ third-party service providers is 

necessary to protect investors from the risks detailed 

in the Outsourcing Proposal. At the same time, we 

are sensitive to, among other things, concerns about 

the compliance costs associated with the proposal. 

In particular, we are concerned that such cost 

burdens could be passed on to investors, especially 

retail investors who currently benefit from investing 

in mutual funds with low fees and expense ratios. 

We look forward to working with our Commission 

colleagues in FY 2024 to help ensure that investors 

are protected against the dangers of adviser 

outsourcing without incurring any unnecessary 

costs for advisory services.

Mutual Funds: Transaction Costs 

and Dilution

In FY 2024, we look forward to working with 

our colleagues in the Division of Investment 

Management to address investor concerns 

regarding the dilution of long-term shareholders’ 

interests in mutual funds. 

Millions of retail investors rely on mutual fund 

investments for long-term savings goals such as 

paying for college, buying a home, or retiring 

comfortably. The value of long-term investors’ 

mutual fund shares are diluted, however, when the 

fund buys portfolio investments to invest proceeds 

from purchasing shareholders or sells portfolio 

investments to meet shareholder redemptions.66

Mutual fund shares do not trade on exchanges like 

exchange-traded funds or closed-end funds, but are 

instead purchased and redeemed directly from the 

issuer at prices that reflect the next-calculated net 

asset value (NAV) of the fund at the end of the day 

of the purchase or redemption. Trading activity and 

other changes in portfolio holdings associated with 

the transactions, however, may occur over multiple 

business days following the purchase or redemption 

request.67 The costs of the transactions are therefore 

borne by all shareholders remaining in the mutual 

fund after the purchase or redemption.
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 13

Over time, the interests of long-term shareholders 

in a fund may be significantly diluted by the 

purchase and redemption activity of other 

investors in the fund. The less liquid the fund’s 

portfolio holdings, the greater this dilution effect 

can become, due to the higher transaction costs 

associated with less liquid investments. Similarly, 

during times of market stress, the dilution effect 

may be greater because the fund may be forced to 

buy or sell holdings at unfavorable market prices.

A mutual fund has a number of tools available to 

mitigate dilution under existing Commission rules, 

including the fund’s liquidity risk management 

program, the option to use swing pricing, and the 

ability to impose purchase or redemption fees.68

Effective liquidity risk management programs may 

reduce a fund’s need to incur higher transaction 

costs associated with less liquid investments, even in 

times of market stress. Swing pricing is a fund share 

pricing method intended to allocate costs stemming 

from inflows or outflows to those investors engaged 

in purchasing or selling activity, rather than to other 

investors. And redemption fees charged to investors 

engaged in selling activity can help protect the 

interests of non-redeeming shareholders.

Notwithstanding these avenues for mitigating 

dilution, in March 2020 mutual funds faced 

significant redemptions and liquidity concerns 

in connection with economic shock from the 

onset of the COVID-19 pandemic.69 Commission 

staff subsequently conducted a review of funds’ 

current tools for managing liquidity and limiting 

dilution, finding weaknesses in funds’ liquidity 

risk management programs and limited use of 

tools designed to limit dilution such as redemption 

fees or swing pricing.70 On November 2, 2022, 

the Commission voted to propose amendments 

intended to better prepare mutual funds (and 

certain other open-end funds) for stressed market 

conditions and to mitigate dilution of shareholders’ 

interests.71 Among other things, the Commission’s 

proposal would require mutual funds to implement 

swing pricing.72

While we take no position at this time on the 

specific recommendations in the Liquidity and 

Swing Pricing Proposal, we are encouraged by the 

Commission’s efforts to mitigate dilution. At the 

same time, we are sensitive to feedback received 

regarding the potential operational challenges that 

may accompany a transition to swing pricing and 

the impact those challenges may have on retail 

investors. We look forward to continuing to discuss 

and evaluate the proposal, as well as alternative 

anti-dilution approaches suggested by fund industry 

participants and observers.

INVESTOR ENGAGEMENT

OIAD is statutorily mandated to identify problems 

that investors may have, analyze the potential 

impacts on investors of rules or regulations, and 

make proposals to the Commission to promote 

the interests of investors.73 One of the primary 

ways in which OIAD collects this information and 

sustains a focus on investors is through ongoing 

investor engagement activities.74 This includes 

investor-focused meetings, events, and activities 

that are designed primarily to engage directly 

with investors and receive feedback about policy 

questions, investing challenges, regulatory policy 

and rulemaking, investment products and services, 

investor issues, and/or potential misconduct.
14 | OFFICE OF THE INVESTOR ADVOCATE

The Office actively seeks input from a broad range 

and variety of investors—including individual retail 

investors, smaller and regional investor groups 

and advocates, public and private pension funds, 

and other small and large money managers—as 

well as regulatory counterparts, non-profits, and 

consumer groups. Retail investors, and their 

unique perspectives, are particularly important to 

OIAD. We place special emphasis on individuals 

and groups whose views and needs may be less 

frequently heard, including those who do not 

routinely travel to Washington, DC, to lobby 

government leaders, or who do not regularly 

submit comment letters to the Commission. 

Among those whom OIAD especially seeks to hear 

from are older investors, new investors, veterans 

and military spouses, affinity-connected investors, 

investors from historically underserved, rural, or 

Native American/First Nations’ communities, and 

investors with disabilities. The Office also solicits 

and encourages input from a range of stakeholders’ 

epistemological perspectives and values. 

The goals for our investor engagement are twofold:

§	Understand the authentic and unabridged 

voices of investors, their perspectives on 

policies, rulemaking, and the markets, and 

communicate them in a decision-useful context 

for Commission leaders and staff, and

§	Advocate for investors’ interests in the 

regulatory and rulemaking environments 

in a manner consistent with the Office’s 

statutory mission.

In the coming fiscal year, we anticipate expanding 

engagement opportunities where retail investors can 

share their experiences directly with Commission 

leadership and staff, meeting with a broad array of 

investors and investor representatives to gain from 

their perspectives and inform policy, and identifying 

and advocating for the trends, issues, and policies 

that investors consider to be important. 

OFFICE OF INVESTOR RESEARCH

The Investor Advocate is directed by Congress to 

identify problems that investors have with financial 

service providers and investment products, as 

well as areas in which investors would benefit 

from changes in the Commission’s or SROs’ 

regulations.75 To better identify problems that 

investors may have, and analyze the potential 

impacts on investors of rules or regulations, the 

Office of Investor Research (OIR) within OIAD 

conducts research on issues that affect a broad set 

of investors. OIR serves the public, OIAD, and the 

Commission by providing data and evidence that 

can inform policymaking, ultimately aiming to 

increase the public’s participation and opportunities 

for success in the investment marketplace by 

offering research that may lead to better decisionmaking and outcomes.

As detailed in OIAD’s Report on Activities for 

Fiscal Year 2022, OIR is focused on high-quality 

data collection methods; multi-modality data 

collection approaches; studying outcomes that 

represent meaningful, positive change for investors; 

and ensuring our work is cost-effective and timely. 
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 15

We collaborate with other SEC divisions and offices 

to assist policymakers by contributing technical 

expertise and advanced data collection methods on 

important investor issues. We also work on deep 

knowledge generation projects that allow us to 

more thoroughly understand investors’ problems 

and test solutions that work for investors. In both 

ways we seek to provide actionable insights for 

policymakers to tailor effective solutions to the 

problems that investors experience. 

In the coming year, we will continue to conduct 

thoughtful research on issues that affect a broad 

set of investors while collecting customized data 

through testing, surveys and qualitative methods. 

Our research will continue in such important 

domains as disclosure effectiveness, financial 

advice, and understanding investors. To increase 

our policy impact by shortening our project 

lead time, and develop and track policy-relevant 

metrics over time, we plan to launch a program 

of longitudinal investor surveys. Longitudinal 

surveys provide an effective method for quickly 

recruiting participants with certain characteristics, 

and understanding time-sensitive dynamics within 

a given household—information that is critical to 

understanding investor activity and policy efficacy. 

We will also continue to seek opportunities to work 

with rulemaking divisions and use our tools to 

advocate for investor-centered thinking in policy 

design; for example, we are currently working to 

inform the Division of Investment Management’s 

potential rulemaking on Registered Indexed 

Linked Annuities (RILAs). In sum, these efforts 

seek to improve our infrastructure for providing 

key investor information to the Commission, 

increase the knowledge base with which we are 

able to advocate for investor interests, and directly 

advocate for investors in the policymaking process. 

REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 17

OMBUDS’ REPORT

As set forth in 

Exchange Act 

Section 4(g)(8), 15 

U.S.C. § 78d(g)

(8), the Ombuds 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 Ombuds.76

The Ombuds is also required to “submit a 

semi-annual report to the Investor Advocate 

that describes the activities and evaluates the 

effectiveness of the Ombuds during the preceding 

year” (Ombuds’ Report).77 The Ombuds’ Report 

must be included in the semi-annual reports 

submitted by the Investor Advocate to Congress. 

To maintain reporting continuity, the Ombuds’ 

Report included in the Investor Advocate’s June 

30 Report on Objectives describes the Ombuds’ 

activities during the first six months of the current 

fiscal year and provides the Ombuds’ objectives for 

the following full fiscal year. The Ombuds’ Report 

included in the Investor Advocate’s December 31 

Report on Activities describes the activities and 

discusses the effectiveness of the Ombuds78 during 

the full preceding fiscal year.

Accordingly, this Ombuds’ Report provides 

a look back on the Ombuds’ activities for the 

six-month period of October 1, 2022, through 

March 31, 2023 (Reporting Period), and discusses 

the Ombuds’ objectives and outlook for FY 2024, 

beginning October 1, 2023.

OMBUDS ROLE AND STANDARDS 

OF PRACTICE 

The Ombuds assists retail investors and other 

persons with concerns or complaints about the SEC 

or the SROs the SEC oversees. The assistance the 

Ombuds 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 
18 | OFFICE OF THE INVESTOR ADVOCATE

§	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.

In practice, individuals often seek the Ombuds’ 

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.

Like Ombuds at other federal financial regulators, the SEC Ombuds follows three core standards of practice:

Confidentiality Impartiality Independence

The Ombuds has established 

safeguards to protect 

confidentiality, including the 

use of an electronic platform 

for receiving inquiries, a 

separate email address, 

dedicated telephone and fax 

lines, and secure file storage.

The Ombuds generally treats 

matters as confidential, and 

takes reasonable steps to 

maintain the confidentiality of 

communications. The Ombuds 

also attempts to address 

matters without sharing 

information outside of the 

Ombuds staff, unless given 

permission to do so. However, 

the Ombuds 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 Ombuds does not 

represent or act as an advocate 

for any individual or entity, and 

does not take sides on any 

issues. The Ombuds 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 Ombuds 

reports directly to the Investor 

Advocate, who reports 

directly to the Chair of the 

SEC. However, OIAD and the 

Ombuds 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 Ombuds reports directly 

to Congress without any 

prior review or comment 

by the Commission or other 

Commission staff.
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 19

The Ombuds’ Challenge 

The mission statement of the SEC is to “protect 

investors, maintain fair, orderly, and efficient 

markets, and facilitate capital formation.”79 A 

predictable question we encounter, then, is what 

particular role does the Ombuds play in protecting 

investors? Among many other things, staff in 

our Office submits tips, complaints, and referrals 

regarding credible allegations of securities law 

violations to the Division of Enforcement. We 

conduct independent research and craft tailored 

solutions for an investor’s question or problem. 

We monitor trends in retail investor complaints to 

identify emerging areas of concern. 

Sometimes, however, our staff is unable to provide 

investors with the assistance or relief they request. 

For instance, the Ombuds may not:

§	decide 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; 

§	intervene on behalf of, or represent the 

interest of, an investor in a formal dispute or 

investigation process; 

§	provide advice on how the federal securities 

laws may impact their particular investments or 

legal options; or 

§	change formal outcomes, including decisions 

about whether to investigate an allegation of 

wrongdoing, settle an enforcement action, or 

create a Fair Fund. 

Given these limitations, when investors contact our 

Office with such requests, we may identify other 

means to protect their interests and preserve their 

legal rights. When appropriate, our staff may direct 

investors to other SEC resources that will address 

their questions or concerns, or we may direct 

investors to external avenues of assistance. For 

example, when an investor contacts the Ombuds 

with concerns that fall under the purview of 

another federal financial regulator, our staff may, 

after obtaining consent from the investor, facilitate 

communication between the investor and the 

Ombuds from the appropriate regulatory agency 

to resolve the matter. 

In addition to responding to investor complaints, 

requests and concerns on an ad hoc basis, Ombuds 

staff also stays current on policy issues that affect 

retail investors by engaging with investor advocacy 

groups and law school securities arbitration clinics 

that provide legal services to harmed investors. 

Through this 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 Ombuds 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, tracking and analyzing matter and 

contact information. It ensures our Office meets all 

data management, confidentiality, and reporting 

obligations required by statute and the SEC Rules 

of Practice. The OMMS Form, a web-based, 

mobile-responsive form permitting the submission 

of inquiries, complaints, and documents directly 

to the Ombuds, guides the submitter through a 

series of questions specifically designed to elicit 

information concerning matters within the scope 

of the Ombuds’ function. In addition, OMMS 

allows staff to easily upload and maintain related 

documents for review.
20 | OFFICE OF THE INVESTOR ADVOCATE

When an OMMS matter record is created, 

Ombuds staff can review the matter details and 

communicate with the investor via the OMMS 

platform. OMMS also enables the Ombuds 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. 

As noted above in the Message from the Investor 

Advocate, this upcoming fiscal year, the SEC’s 

Office of Information Technology will deploy 

a number of enhancements to OMMS. These 

enhancements will improve the accuracy with 

which staff classifies complaints, and will track 

additional information about the disposition of 

OMMS matters. The enhancements will also 

increase the speed of service to retail investors 

by enabling Ombuds staff to more quickly 

and accurately process complaints and provide 

responses to investors.

While the Ombuds encourages persons to submit 

their inquiries via the OMMS Form, persons who 

do not wish, or are unable, to use the OMMS Form 

may contact the Ombuds by email, telephone, fax, 

and mail. The following graphic illustrates the 

general lifecycle of what happens when investors 

or other interested persons contact the Ombuds 

for assistance: 

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 Ombuds may 

contact you, SEC 

staff, and other 

key persons for 

more details on 

the matter. The 

Ombuds will 

discuss your 

concerns about 

confidentiality, if 

any, at this point. 

The Ombuds 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 Ombuds 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 Ombuds 

resolves your 

matter or provides 

options for you 

to consider. You 

may be advised 

to contact another 

SEC division or 

office, or another 

entity for further 

assistance or 

resolution options. 

We update your 

matter records 

accordingly. This 

provides the 

Ombuds with 

easy access to 

your matter 

information 

should you 

have additional 

questions or 

concerns. 
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 21

SERVICE BY THE NUMBERS 

To respond to inquiries effectively and efficiently, 

Ombuds staff monitors the volume of inquiries 

and the resources devoted to addressing the 

particular concerns raised. Ombuds staff tracks all 

inquiries received by, or referred to, the Ombuds 

Office, as well as all related correspondence and 

communications to and from Ombuds 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 our Office identify systemic 

or problematic issues, analyze matter volume 

and trends, and provide data-driven support for 

recommendations to the Investor Advocate. 

Inquiry Volume

Inquiry volume is measured 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 Ombuds. When a matter is created, 

Ombuds staff 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. 

To note, a single matter may generate numerous 

subsequent contacts—related inquiries and communications to or from the Ombuds staff deriving 

from the matter. These contacts often require staff 

to answer additional investor questions, to explain 

or clarify proposed resolution options, or to discuss 

issues with appropriate SEC or SRO staff.

Data across Primary Issue Categories 

The Primary Issue Categories identified below are 

broad descriptive labels that reflect the nature of 

the primary issue raised in a submission, in light of 

the information in that submission. From October 

1, 2022, through March 31, 2023, retail investors, 

industry professionals, concerned citizens, and 

other interested persons contacted the Ombuds for 

assistance on 1,336 matters covering 12 Primary 

Issue Categories.80

Matters by Primary Issue Category

October 1, 2022 – March 31, 2023

0%

0%

1%

Allegations of Securities Law Violations / Fraud (146)

Atypical Matters (109)

Company Disclosures and Information (44)

FINRA Complaints / Questions / Procedures (169)

Investment Products / Retirement Accounts (408)

Non-SEC / Other Matters (152)

Organized Campaigns (10)

SEC Investigations / Litigation / Enforcement Actions (57) 

SEC Questions / Complaints (214)

Securities Laws / Rules / Regulations / Procedures (23)

Securities Ownership (3)

SRO Rules / Procedures (1)

2%

31%

11%

8%

11%

4%

16%

3%

13%
22 | OFFICE OF THE INVESTOR ADVOCATE

In addition to the 1,336 matters received from 

October 1, 2022, to March 31, 2023, Ombuds 

staff fielded 1,520 subsequent contacts deriving 

from the original matters for a total of 2,855 

contacts with the public in the first half of this 

fiscal year. The chart that follows displays the 

distribution of the additional 1,520 contacts across 

the 12 Primary Issue Categories:

Contacts by Primary Issue Category

October 1, 2022 – March 31, 2023

0%

0%

1%

Allegations of Securities Law Violations / Fraud (251)

Atypical Matters (24)

Company Disclosures and Information (50)

FINRA Complaints / Questions / Procedures (240)

Investment Products / Retirement Accounts (366)

Non-SEC / Other Matters (162)

Organized Campaigns (9)

SEC Investigations / Litigation / Enforcement Actions (102) 

SEC Questions / Complaints (274)

Securities Laws / Rules / Regulations / Procedures (37)

Securities Ownership (4)

SRO Rules / Procedures (1)

2%

24%

16%

2%

11%

7%

18%

3%

16%

This Reporting Period, we observed a significant 

decrease in the number of investor matters 

involving volatile stocks known as “meme” stocks, 

as compared with the same reporting period 

last year. At the same time, there has been an 

exponential increase in investor matters regarding 

the application of SRO rules, as well as matters 

regarding the SEC’s supervision of SROs. We 

discuss these and other notable trends in Areas of 

Importance and Interest to Retail Investors below.

How the Numbers Inform Our Efforts 

The Ombuds Office 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 Ombuds 

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 data across primary issue categories, the 

Ombuds may more easily identify potential areas of 

concern for retail investors, and may act as an early 

warning system about the impact of particular 

issues or policies on retail investors and others. 

While the numbers above capture the volume and 

categories of submissions our Office receives, the 

data does not capture the full value of the services 

that Ombuds staff 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 Office’s approach as we 

examine SEC or SRO policies and rulemakings.
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 23

AREAS OF INTEREST AND 

IMPORTANCE TO RETAIL INVESTORS 

During the Reporting Period, Ombuds staff 

received 1,336 matter submissions, and initiated 

over 1,500 more contacts by telephone and 

email with persons who came to our office 

for assistance. The summaries that follow are 

composite descriptions of inquiries and complaints, 

with details generalized, modified, or removed to 

avoid the disclosure of nonpublic or confidential 

information. The summaries should help inform 

the reader about the variety of submissions we 

receive and how we respond to those submissions.

Fraudulent Online Entities

Ombuds staff handled many matters involving 

investments made through unregistered online 

brokers and exchanges, most offering high-yield 

investment plans or trading in digital assets 

and advertised via social media. These investors 

believed the online brokers or exchanges were 

legitimate, only to later find themselves unable 

to access their funds. Investors generally 

contacted the Ombuds after receiving demands 

for “advance fee” payments,81 sometimes by an 

SEC or FINRA impersonator.

When appropriate, Ombuds staff submitted 

complaints involving alleged securities law 

violations to the SEC’s tips, complaints, and 

referrals (TCR) system. Staff also referred matters 

involving SEC or FINRA impersonators to staff 

in the SEC’s Office of Inspector General (OIG), 

Office of the General Counsel (OGC), or 

appropriate FINRA staff, and provided harmed 

investors with information about advance fee 

fraud, as well as public information about the 

potentially fraudulent entities. In some cases, 

through these efforts, our staff was able to prevent 

the further loss of investor funds. 

Rules on Equity Market Structure 

Many investors expressed concern about the effect 

of current SEC and SRO market structure rules on 

their personal interests or on market fairness. For 

instance, some investors questioned the legality 

or fairness of short sales conducted through 

alternative trading systems known as “dark pools,” 

which allow users to price orders without publicly 

displaying the size or price to other participants. 

Other investors expressed concern about payment 

for order flow and other issues involving order 

routing. Investors often alleged the current market 

structure rules enabled market makers and 

institutional investors to profit at the expense 

of retail investors. 

Among other things, Ombuds staff provided 

these investors with educational materials about 

the relevant market structure regulations and 

SEC or SRO rules. After the SEC announced 

sweeping proposed reforms to its market structure 

rules on December 14, 2022, Ombuds staff 

directed investors to the proposed rules and 

encouraged them to submit comment letters 

expressing their concerns.82

Digital Assets Issuers and Exchanges

The Ombuds received complaints regarding 

problems with digital assets issuers and the 

unregistered exchanges that trade digital assets. 

During the last fiscal year, many of these exchanges 

and issuers declared bankruptcy and investors 

found themselves unable to access their assets. 

Ombuds staff helped educate these investors on 

the status of digital assets regulation, including 

the SEC Chair’s calls for issuers and exchanges to 

register with the SEC. Where relevant, Ombuds 

staff directed investors to civil and criminal actions 

instituted by the SEC and U.S. Department of 

Justice against certain issuers and exchanges.
24 | OFFICE OF THE INVESTOR ADVOCATE

FINRA Trading Halt—Rule 6440(a)(3) 

Many retail investors have contacted our office 

to express concerns regarding a December 2022 

trading halt implemented by FINRA pursuant to 

FINRA Rule 6440(a)(3). This rule permits FINRA 

to halt trading and quotations in over-the-counter 

(OTC) equity securities where FINRA determines 

that “an extraordinary event has occurred or 

is ongoing that has had a material effect on the 

market for the OTC Equity ... or has caused or 

has the potential to cause major disruption to 

the marketplace or significant uncertainty in the 

settlement and clearance process.”83 We appreciate 

the gravity of these concerns, as well as the impact 

the trading halt has had on many retail investors. 

We will continue to monitor developments in this 

matter, and to provide assistance and information 

to interested parties in accordance with SEC 

policies and procedures.

Ombuds as a Resource

During this Reporting Period, Ombuds staff 

reviewed, analyzed, and evaluated over a thousand 

investor matters. We researched applicable laws, 

rules, and regulations, and engaged in discussions 

with staff across the Commission to appropriately 

address and resolve investor concerns. The majority 

of our processing involves, on the one hand, 

internal referrals to or consultation with staff in 

other divisions or offices such as the Office of 

Investor Education and Advocacy, OIG, OGC, 

Enforcement/TCR/Whistleblower, Distributions/

Collections, Corporation Finance, Trading and 

Markets, and Investment Management. On 

the other hand, for matters outside the SEC’s 

jurisdiction, Ombuds staff provide resources and 

referral information for the appropriate SROs or 

other regulatory entities, such as the Consumer 

Financial Protection Bureau (CFPB), Commodity 

Futures Trading Commission (CFTC), Federal 

Deposit Insurance Corporation (FDIC), the Federal 

Reserve Board, Federal Trade Commission (FTC), 

and Departments such as Justice, Labor, and 

Treasury. Through our Office’s collaboration with 

colleagues throughout the Commission, we are 

able to provide retail investors the information and 

resources they need to address a given issue.

ACTING IN THE INTERESTS OF 

RETAIL INVESTORS 

To address issues that affect retail investors, 

our Office may participate in, or undertake an, 

analysis of those issues and, when possible, 

identify ways to improve existing SEC and SRO 

policies or processes.84

In FY 2024, Ombuds staff will focus efforts 

on highlighting issues surrounding mandatory 

arbitration in the investment advisory context. 

We will continue our study of the incidence and 

potential effects of discovery disputes in the 

FINRA Dispute Resolution Services (FINRA DRS) 

forum, and will review SRO rulemakings for 

their potential impact on retail investors. We will 

monitor market events that affect the retail investor 

experience and, where necessary, raise awareness of 

those effects within the Commission.

Mandatory Arbitration Clauses in Investment 

Advisory Agreements 

The Ombuds Office has previously acknowledged 

growing concerns about the use of mandatory 

arbitration clauses in investment advisory 

agreements among SEC-registered advisers.85 In our 

2022 Report on Activities, we noted the completion 

of a preliminary study on the frequency with which 

mandatory arbitration clauses and related terms 

appear in advisory agreements.86
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 25

Ombuds and OIAD staff have since then broadly 

expanded the scope of the preliminary study and 

identified additional methods of obtaining more 

data regarding mandatory arbitration clauses. Staff 

reviewed a broad, diverse sample of investment 

advisory agreements, and compiled data regarding 

the occurrence of mandatory arbitration clauses, 

as well as the occurrence of other terms that 

would have an impact on the affordability and 

accessibility of arbitration for retail investors. 

Given the significance of mandatory arbitration for 

investors harmed by their advisers, our Office will 

continue its efforts to objectively study the issue 

and inform the public of relevant findings.

Potential Discovery Abuse in 

FINRA Arbitration

The requirement that investors arbitrate disputes 

with brokerage firms in the FINRA dispute 

resolution forum is nearly a universal feature of 

broker-dealer agreements.87 Mandatory arbitration 

has traditionally been justified on the basis that it is 

a faster and less expensive alternative to litigation.88

Nevertheless, investor advocates and practitioners 

have reported that investors have greater difficulty 

obtaining necessary documents and information 

from brokers during discovery arbitration than in 

traditional litigation.89

Accordingly, in late 2022, the Ombuds Office 

initiated a study of FINRA arbitration cases to 

estimate the frequency with which discovery 

disputes take place in FINRA arbitrations, as 

well as the effects such disputes have on arbitral 

outcomes for brokerage customers. Ombuds staff 

will continue its focus on this issue in FY 2024.

Proposed Procedural, Technical, and 

Clarifying Changes to the FINRA Code— 

FINRA 2022-033 

On January 6, 2023, FINRA filed SR-FINRA2022-033 (“FINRA 2022-33” or the “Procedural 

Proposal”), which would implement various 

procedural, technical and clarifying changes to 

the existing Code of Arbitration Procedure for 

Customer Disputes (the “Code”).90 Portions of the 

Procedural Proposal stem from recommendations of 

independent counsel following a review and analysis 

of the FINRA DRS arbitrator selection process.91

If approved, FINRA 2022-33 would modify 

existing rules and practices to provide greater 

transparency and consistency to the arbitrator 

selection process. For instance, the Procedural 

Proposal would codify the FINRA DRS Director’s 

current practice of excluding arbitrators from 

arbitrator lists based on a manual review of 

conflicts of interest 92 authorizing the Director to 

remove an arbitrator upon a party’s request or 

upon the Director’s initiative,93 and requiring the 

Director to provide a written explanation to the 

parties of the decision to remove an arbitrator.94

In addition to the proposed changes regarding 

arbitrator selection, the Procedural Proposal would 

codify various procedural, technical and clarifying 

changes to the Code.95 According to FINRA, these 

proposed changes would increase efficiency and 

expedite processes for prehearing conferences 

and hearing sessions, initiating and responding to 

claims, motion practice, claim and case dismissals, 

and providing a hearing record.96 For instance, the 

Procedural Proposal would, among other things: 

make video conference the default option for 
26 | OFFICE OF THE INVESTOR ADVOCATE

prehearing conferences97 and special proceedings 

in simplified arbitrations;98 require participants 

in simplified arbitrations to redact personal 

confidential information (PCI) in filings to FINRA 

DRS;99 and codify arbitrators’ authority to combine 

cases.100 The Procedural Proposal would also clarify 

various aspects of motion practice, amendment of 

pleadings and filing third party claims in FINRA 

DRS.101

Commenters largely supported the proposed rule 

changes.102 However, several commenters suggested 

a number of modifications, such as providing 

additional guidance to parties about redacting 

PCI;103 permitting pro se investors to waive PCI 

redaction or allowing FINRA DRS to redact PCI on 

their behalf;104 and requesting further clarification 

about arbitrators’ authority to combine cases.105

In response to commenters,106 FINRA amended 

the Procedural Proposal to further clarify when 

arbitrators may combine cases, and agreed to 

provide additional guidance for redacting PCI.107

On April 12, 2023, the SEC solicited additional 

comments on the amended Procedural Proposal 

and instituted proceedings to determine whether 

to approve or disapprove the proposed changes as 

modified by the amendment.108

Our Office generally believes these proposed rule 

changes will benefit parties in FINRA DRS by 

increasing transparency, consistency, efficiency, 

and clarity of FINRA DRS procedures. We will 

continue to monitor the progress of the Procedural 

Proposal, as well as commenters’ views on the 

proposed changes.

Newly Proposed Revisions to FINRA’s 

Expungement Rules: FINRA 2022-24

Access to accurate historical information about an 

individual broker’s disputes with customers may 

inform investor decisions about whom to hire, and 

help regulators identify candidates for examination 

or enforcement action. The expungement, or 

removal, of a broker’s customer dispute information 

from the Central Registration Depository system 

and from FINRA’s BrokerCheck® may therefore 

lead to less-informed investor behavior, and weaken 

regulators’ ability to detect and deter misconduct. 

For these and other reasons, expungement was 

intended to be an “extraordinary remedy,” granted 

in accordance with FINRA rules to remove clearly 

inaccurate customer dispute information from the 

record of individual brokers.109 However, continued 

reports that arbitrators awarded expungement relief 

for a vast majority of expungement requests110 made 

clear that modifications to the existing expungement 

rules were likely necessary to restore expungement 

to its “extraordinary remedy” status. Our Office 

has closely monitored FINRA’s previously proposed 

revisions to the expungement rules, with a focus on 

preserving retail investor interests and regulatory 

access to customer dispute information.111

FINRA filed its most recent expungement proposal 

—SR-FINRA 2022-24—(“FINRA 2022-24” or the 

“Expungement Proposal”) with the Commission 

on July 29, 2022.112 Following a period of public 

comment and two partial amendments,113 on April 

12, 2023, the Commission announced its intent to 

approve FINRA 2022-24, as amended by the two 

partial amendments, on an accelerated basis.114
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 27

FINRA 2022-024, as amended, will significantly 

modify FINRA’s existing expungement rules, in 

part, by:

§	requiring expungement requests filed by 

associated persons outside of customer 

arbitrations (straight-in requests), to be decided 

by a three-arbitrator panel, randomly selected 

from a roster of experienced public arbitrators 

with enhanced expungement training (Special 

Arbitrator Roster);

§	prohibiting parties to a straight-in request from 

agreeing to fewer than three arbitrators to 

consider their expungement requests, striking 

any of the selected arbitrators, stipulating to an 

arbitrator’s removal or stipulating to the use of 

pre-selected arbitrators; 

§	notifying state securities regulators of all 

expungement requests, providing more 

opportunity for state securities regulators to 

attend and participate in expungement hearings 

in straight-in requests; 

§	imposing time limits for filing straight-in 

requests; and 

§	requiring unanimous agreement of the arbitrator 

panel to grant expungement relief.115

FINRA additionally expressed its intent to observe 

the effects of these rule changes and to make 

further adjustments to the expungement process 

if needed.116

We believe these changes will enhance the 

investor protections afforded by FINRA’s 

existing expungement rules, helping ensure 

that expungement remains an “extraordinary 

remedy.”117We further believe that, by promoting 

the accuracy of the information publicly available 

in BrokerCheck®, these changes strike an 

appropriate balance between the reputational 

interests of registered representatives and the 

interests of investors and regulators. 

While additional efforts may be needed to ensure 

expungement relief is reserved for factually 

impossible, clearly erroneous or false allegations,118

the Expungement Proposal reflects an important 

and necessary step in protecting investors and in 

safeguarding the markets. We encourage retail 

investors and interested parties to contact our 

Office upon implementation of these rules, if 

further modification to the rules may be required. 

OMBUDS OUTREACH AND 

ENGAGEMENT EFFORTS 

Ombuds Outreach—Investor 

Advocacy Clinics 

In 1997, 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.119 Today, 11 law school investor 

advocacy clinics across the United States provide 

free legal counseling and representation to retail 

investors in securities industry disputes. Under the 

supervision of their professors, clinic students also 

comment on rule proposals that might affect their 

clients’ interests, and participate in other forms 

of public outreach—such as community-based 

presentations and dissemination of informational 

materials tailored to retail investors.120
28 | OFFICE OF THE INVESTOR ADVOCATE

Since 2016,121 the Ombuds Office has actively 

engaged with investor advocacy clinic students and 

professors, exchanging information, experiences 

and ideas about how to protect the interests of 

retail investors. Each year, the Ombuds hosts 

an annual summit where clinic students give 

presentations on issues of specific interest to their 

clients. The summit provides a unique opportunity 

for students and regulators to learn about their 

respective work and practices, providing both 

with a more a well-rounded perspective on retail 

investor concerns.

2023 SEC Investor Advocacy Clinic 

Summit Overview

On Wednesday, March 29, 2023, the Ombuds 

Office and the SEC Division of Enforcement’s 

Retail Strategy Task Force (RSTF) hosted the 

fourth annual SEC Investor Advocacy Clinic 

Summit (Summit) as a virtual event. For the second 

consecutive year, the Summit was a joint endeavor 

between the Ombuds and RSTF. The event, 

livestreamed on the SEC’s website, was intended 

to highlight the work of the law school clinics 

and raise public awareness of the services they 

provide. Students discussed the origin of the clinics 

and nature of their work, the role of mandatory 

arbitration in resolving brokerage disputes, two 

representative cases, resource allocation, and other 

challenges to the viability of the clinics. Over 1,800 

viewers tuned in to the outreach event. 

The event featured remarks and Q&A with 

SEC Chair Gary Gensler, Commissioners Hester 

Peirce, Caroline Crenshaw, Mark Uyeda, and 

Jaime Lizárraga, as well as remarks from Cristina 

Martin Firvida, the SEC’s new Investor Advocate. 

All 11 active law school investor advocacy clinics 

from across the country shared their perspectives 

and engaged with SEC subject matter experts on 

pressing issues currently facing retail investors. 

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.

Given the success of this and prior summits, we 

look forward to hosting future summits—whether 

as in-person, virtual, or hybrid events—as a 

signature feature of the Ombuds’ commitment 

to retail investors and the work of the law 

school clinics. 

Additional Engagement Activities

During this Reporting Period, Ombuds staff 

attended and participated in select securities 

industry events with the goal of improving our 

service to retail investors and educating external 
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 29

groups about the services our Office can provide. 

These events included informational meetings and 

listening sessions with the American Association 

of Justice, the American Association of Retired 

Persons, directors of the law school investor 

advocacy clinics, and the SEC’s international 

regulatory counterparts. Ombuds staff also 

met periodically with the Coalition of Federal 

Ombudsmen, as well as the Public Investors 

Arbitration Bar Association (PIABA), FINRA, 

and the FINRA Ombudsman. Pursuant to the 

Office’s study of mandatory arbitration among 

SEC-registered investment advisers, the Ombuds 

conducted interviews and engaged in discussions 

about mandatory arbitration with PIABA, 

FINRA, the American Association of Individual 

Investors, the Securities Industry and Financial 

Markets Association, the North American 

Securities Administrators Association, Better 

Markets, Financial Services Institute, the American 

Arbitration Association, and JAMS. 

In FY 2024, we will continue to expand 

the footprint of this Office by more actively 

participating in external securities industry 

activities, by establishing new relationships 

and fortifying existing relationships across 

the Commission through enhanced internal 

engagement efforts.

OBJECTIVES AND OUTLOOK

This Reporting Period marks the beginning of my 

service as the SEC Ombuds. I am humbled by this 

appointment, and grateful to our Investor Advocate 

for trusting me to serve the investing public in 

this capacity. However, none of the Office’s work 

would be possible without the tireless efforts of 

Ombuds staff or their commitment to helping those 

in need of our assistance. Within the SEC, our 

Office performs a distinct function that requires 

a unique combination of skills and traits. In that 

regard, this year we have been fortunate to add 

Senior Counsel Richard E. Dominguez to our team 

of professionals. We hope to expand our team in 

the next fiscal year to meet the ever-growing need 

to aid retail investors.

During my time in this Office, I have learned 

much from discussions with colleagues across 

the Commission, by engaging with stakeholders 

interested in investor protection, and by listening to 

the concerns of the investors we serve. I am proud 

of our Office’s efforts to protect and promote retail 

investor interests, but recognize there is much more 

work to do.

In FY 2024, I look forward to further fostering 

our connection with retail investors, with the 

law school investor advocacy clinics, and other 

interested groups that share their views with 

our Office. I hope our work may reach those 

populations that most need a voice, so we may 

be their voice within the Commission. 

 

 Stacy A. Puente 

 Ombuds
30 | OFFICE OF THE INVESTOR ADVOCATE
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 31

SUMMARY OF 

INVESTOR ADVISORY COMMITTEE 

RECOMMENDATIONS AND 

SEC RESPONSES

Congress established the Investor Advisory 

Committee (IAC) to advise and consult with the 

Commission on regulatory priorities, initiatives to 

protect investor interests, initiatives to promote 

investor confidence and the integrity of the 

securities marketplace, and other issues.122 As 

an independent advisory committee, the IAC is 

independent not only of the Commission, but also 

of OIAD, even though the Investor Advocate is a 

statutory member of the IAC. 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, nor more than 20, members appointed by the 

Commission to represent the interests of various 

types of individual and institutional investors.123

Exchange Act Section 39 authorizes the IAC 

to submit findings and recommendations for 

review and consideration by the Commission.124

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.125

While the Commission must respond to the IAC’s 

recommendations, it is under no obligation to agree 

with or act upon the recommendations.126

As presented below, this report summarizes 

recommendations the IAC has made since 

June 2022, and the SEC’s responses to them.127

Although we are not required to report IAC 

recommendations and SEC responses, historically, 

we have done so. In reviewing the summaries 

below, it is important to understand that the 

Commission currently may be pursuing initiatives 

that are responsive to IAC recommendations 

but that have not yet been made public. Because 

Commission staff—including the staff of this 

Office—are prohibited from disclosing nonpublic 

information,128 any pending initiatives are not 

reflected in this Report.

For a complete list of recommendations of the 

IAC, please see the Spotlight on Investor Advisory 

Committee webpage at SEC.gov/spotlight/investoradvisory-committee.

CUSTOMER ACCOUNT STATEMENTS129

On March 2, 2023, the IAC recommended 

surveying investors about statement use and utility; 

amending FINRA Rule 2231 to improve contents, 

format, and presentation; standardizing terms for 

comparable performance measures in statements; 

requiring investment advisers to provide statements 

at least quarterly; and continuing paper as a default 

delivery method with an option for electronic 

delivery. A response from the SEC is pending.
32 | OFFICE OF THE INVESTOR ADVOCATE

ACCOUNTING MODERNIZATION130

On September 21, 2022, the IAC recommended 

establishing an advisory committee on Accounting 

Modernization that can assist the Financial 

Accounting Standards Board (FASB) in its 

standard-setting process; requiring that the 

FASB study the costs of delayed rulemaking; 

and urged the FASB to create a single searchable 

database of its authoritative literature that would 

be freely available to the public. On February 

27, 2023, the Financial Accounting Foundation 

announced free access to online accounting 

standards codification.131

CLIMATE-RELATED DISCLOSURE132

In response to the Commission’s March 2022 

proposed rules on public company climaterelated disclosure,133 on September 21, 2022, 

the IAC recommended adding a requirement of 

“Management Discussion of Climate-Related 

Risks & Opportunities;” requiring disclosure of 

material facility locations; and eliminating the 

disclosure requirement around board expertise. 

Further SEC action on the proposed rules is 

pending, as reflected in the SEC’s Regulatory 

Flexibility Agenda.

CYBERSECURITY DISCLOSURE134

In response to the Commission’s March 2022 

proposed rules on public company cybersecurityrelated disclosure,135 on September 21, 2022, the 

IAC recommended requiring companies to disclose 

key factors used to determine the materiality 

of a cybersecurity incident; extending certain 

disclosure provisions to registration statements; and 

reconsidering the disclosure requirement around 

board cybersecurity expertise. Further SEC action 

on the proposed rules is pending, as reflected in the 

SEC’s Regulatory Flexibility Agenda.

PROTECTING OLDER ADULT 

INVESTORS136

On June 9, 2022, the IAC recommended proposing 

various reforms to improve the deterrence and 

prosecution of investment fraud against older 

adults. These recommendations included shifting 

the foundational values that reinforce harmful 

victim-blaming practices; helping to decrease victim 

shame, deprioritization, and dehumanization; 

strengthening the system for reporting, addressing, 

and preventing investment fraud; improving 

efforts to encourage investors to conduct robust 

background checks before entrusting a firm or 

professional; strengthening investor protection 

for self-directed IRAs; developing a plan to 

strengthen the training of investment professionals; 

and encouraging the identification of a trusted 

third-party contact on all financial accounts. 

On June 12, 2023, the SEC’s Office of Investor 

Education and Advocacy announced a public 

service campaign encouraging financial literacy 

among older investors. The campaign provides 

older investors with tools and resources to protect 

their investments and retirement assets.137 A further 

response from the SEC is pending.

FUNDING INVESTOR ADVOCACY 

CLINICS138

On June 9, 2022, the IAC recommended 

renewing a 2018 IAC recommendation regarding 

financial support for law school clinics that 

represent investors. The IAC recommended that 

the SEC support the Investor Justice Act of 2022, 

which, if enacted, would provide authority to 

the SEC to establish a grant program to fund 

qualified investor advocacy clinics with the SEC’s 

Congressional-appropriated funds. A response 

from the SEC is pending.
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 33

1

ENDNOTES

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 Statement Regarding the SEC’s Rulemaking 

Package for Investment Advisers and Broker-Dealers, 

Rick A. Fleming, Investor Advocate (June 5, 2019), 

available at https://www.sec.gov/news/public-statement/

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

14 See Staff Bulletin: Standards of Conduct for BrokerDealers and Investment Advisers Care Obligations 

(Apr. 20, 2023), available at https://www.sec.gov/tm/

standards-conduct-broker-dealers-and-investmentadvisers. 

15 See, e.g., Request for Information and Comments 

on Broker-Dealer 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 Rel. No. 92766, 86 Fed. Reg. 

49067, 49075 (Sept. 1, 2021), available at https://www.

federalregister.gov/d/2021-18901 (“The use of a DEP 

by a broker-dealer may, depending on the relevant facts 

and circumstances, constitute a recommendation for 

purposes of Reg BI.”)

16 See id. at 49077. 

17 See id. at section II.C.2.

18 See Proposed Rules, Office of Management and 

Budget, SEC Agency Rule List, Digital Engagement 

Practices for Broker-Dealers, RIN 3235-ANOO, 

available at https://www.reginfo.gov/public/do/

eAgendaViewRule?pubId=202210&RIN=3235-AN00, 

and Digital Engagement Practices for Investment 

Advisers, RIN 3235-AN14, available at 

https://www.reginfo.gov/public/do/eAgendaViewRule?

pubId=202210&RIN=3235-AN14.

19 See Proposed Rule, Regulation Best Execution, 

Exchange Act Release No. 96496, 88 Fed. Reg. 5440 

(Jan. 27, 2023), available at https://www.federalregister.

gov/d/2022-27644. 

20 See Comment File S7-32-22, Regulation Best 

Execution, available at https://www.sec.gov/comments/

s7-32-22/s73222.htm. 

21 See Proposed Rule, Regulation S-P: Privacy of 

Consumer Financial Information and Safeguarding 

Customer Information, Exchange Act Release 

No. 97141, 88 Fed. Reg. 20616 (Apr. 6, 2023), 

available at https://www.federalregister.gov/

documents/2023/04/06/2023-05774/regulation-sp-privacy-of-consumer-financial-information-andsafeguarding-customer-information. 

22 Press Release. SEC Proposes Changes to Reg S-P to 

Enhance Protection of Customer Information (Mar. 

15, 2023), available at https://www.sec.gov/news/pressrelease/2023-51. 

23 Fact Sheet, SEC, Proposed Enhancements to Regulation 

S-P (Mar. 15, 2023), available at https://www.sec.gov/

files/34-97141-fact-sheet.pdf. 

24 For example, in 2019, the estimated amount of capital 

reported as raised in private offerings under Rule 

506(b) of Regulation D was $1.5 trillion, compared 

to a total of $1.2 trillion raised in registered offerings. 

SEC, Staff Report to Congress on Regulation A 

/ Regulation D Performance (2020) [hereinafter 

“Report on Regulation A and Regulation D”], at 16, 

available at https://www.sec.gov/files/report-congressregulation-a-d.pdf.

25 See McKinsey & Co., McKinsey Global Private 

Markets Review 2023: Private markets turn down 

the volume (Mar. 2023), available at https://www.

mckinsey.com/industries/private-equity-and-principalinvestors/our-insights/mckinseys-private-marketsannual-review#/ (last visited June 1, 2023).
34 | OFFICE OF THE INVESTOR ADVOCATE

26 See, e.g., Report on Regulation A and Regulation D, 

at 40.

27 See, e.g., SEC, Investor Bulletin, Private Placements 

under Regulation D (Aug. 17, 2022), available at 

https://www.sec.gov/oiea/investor-alerts-and-bulletins/

private-placements-under-regulation-d-investorbulletin; Rachita Gullapalli, SEC, Div. of Econ. and 

Risk Analysis, Misconduct and Fraud in Unregistered 

Offerings: An Empirical Analysis of Select SEC 

Enforcement Actions (Aug. 2020), available at https://

www.sec.gov/files/misconduct-and-fraud-unregisteredofferings.pdf; Caroline A. Crenshaw, Commissioner, 

SEC, Big “Issues” in the Small Business Safe Harbor: 

Remarks at the 50th Annual Securities Regulation 

Institute (Jan. 30, 2023), available at https://www.

sec.gov/news/speech/crenshaw-remarks-securitiesregulation-institute-013023.

28 SEC Investor Advisory Committee, Meeting Agenda 

(Mar. 2, 2023), available at https://www.sec.gov/

spotlight/investor-advisory-committee/iac030223-

agenda.htm.

29 See Webcast, SEC Investor Advisory Committee 

Meeting (Mar. 2, 2023), available at https://www.

youtube.com/watch?v=v7t3vwxHwvg.

30 Id.

31 See SEC, Office of the Investor Advocate, Report 

on Activities, Fiscal Year 2020, available at https://

www.sec.gov/files/sec-investor-advocate-reportactivities-2020.pdf at 6 (Amendments to the Securities 

Act Registration Exemptions).

32 See, e.g., Elisabeth de Fontenay, The Deregulation of 

Private Capital and the Decline of the Public Company, 

68 Hastings Law Journal 445-502 (2017).

33 See, e.g., id.; Better Markets, Fact Sheet, Expanding 

Private Markets Undercuts Public Markets, Investor 

Protections, and Capital Formation (2023), available at 

https://bettermarkets.org/wp-content/uploads/2023/04/

Better_Markets_Private_Markets_Investor_Protection_

Fact_Sheet_4-14-23.pdf (last visited June 1, 2023). 

The number of IPOs in the U.S. fell from an annual 

average of 310 during 1980–2000 to an average of 108 

during the 2001–2016 period. Jay R. Ritter, Executive 

Summary: Where Have All the IPOs Gone?, Univ. 

of Fla. (Mar. 17, 2017), available at https://site.

warrington.ufl.edu/ritter/files/2017/03/Where-Have-Allthe-IPOs-Gone_exec-sum.pdf.

34 For example, under Rule 506(b) of Regulation D, 

an issuer may sell securities to an unlimited number 

of accredited investors and up to 35 non-accredited 

investors who are financially sophisticated.

35 An individual is an accredited investor based on wealth 

when that person, either alone or together with a 

spouse or spousal equivalent, has a net worth that 

exceeds $1 million, excluding the value of the person’s 

primary residence.

36 An individual is an accredited investor based on 

income when that person has had an annual income 

that exceeded $200,000 (or $300,000 with a spouse 

or spousal equivalent) in each of the prior two years 

and has a reasonable expectation of the same for the 

current year.

37 An individual can also qualify as an accredited investor 

through other measures of financial sophistication, 

for example, by holding in good standing certain 

professional certifications or designations. Entities 

can qualify as accredited investors by meeting certain 

criteria under the accredited investor definition.

38 See SEC, Office of the Investor Advocate, Report 

on Activities, Fiscal Year 2021, available at https://

www.sec.gov/files/FY21_OIAD_SAR_ACTIVITIES_

REPORT_FINAL_508.pdf at 47 (Ombudsman’s 

Report: Areas of Interest and Importance to 

Retail Investors).

39 See, e.g., letter from the North American Securities 

Administrators Association, Inc. to Erik F. Gerding, 

Director, Division of Corporation Finance, SEC, 

RE: Private Market Reforms (Mar. 7, 2023), 

available at https://www.nasaa.org/wp-content/

uploads/2023/03/2023-03-07-Letter-to-Erik-GerdingRegarding-Private-Market-Reforms.pdf (last visited 

May 19, 2023); Sophistication or Discrimination? How 

the Accredited Investor Definition Unfairly Limits 

Investment Access for the Non-wealthy and the Need 

for Reform, Hearing Before the Subcomm. on Capital 

Markets, H. Comm. on Fin. Serv., 118th Cong. (2023), 

available at https://financialservices.house.gov/calendar/

eventsingle.aspx?EventID=408510.
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 35

40 See Private Fund Advisers; Documentation of 

Registered Investment Adviser Compliance Reviews, 

Investment Adviser Act Rel. No. 5955, 17 C.F.R. 

pt. 275 (Feb. 9, 2022), available at https://www.sec.

gov/rules/proposed/2022/ia-5955.pdf, at n. 6 and 

accompanying text.

41 See Id. See also SEC, Office of the Investor Advocate, 

Report on Objectives, Fiscal Year 2023, at 8, available 

at https://www.sec.gov/files/sec-office-investoradvocate-report-objectives-fy2023.pdf.

42 Id. at note 42 and accompanying text. The 

Commission also recently adopted amendments to 

Form PF, the confidential reporting form for certain 

SEC-registered investment advisers to private funds, 

designed to enhance the ability of the Financial Stability 

Oversight Council to assess systemic risk and to bolster 

the Commission’s oversight of private fund advisers 

and its investor protection efforts. See Amendments to 

Form PF to Require Event Reporting for Large Hedge 

Fund Advisers and Private Equity Fund Advisers and 

to Amend Reporting Requirements for Large Private 

Equity Fund Advisers, Investment Adviser Act Rel. No. 

6297 (May 3, 2023), available at https://www.sec.gov/

rules/final/2023/ia-6297.pdf.

43 These include rulemakings pertaining to Regulation 

D and Form D; the definition of securities held of 

record under Exchange Act Section 12(g); and the 

holding period for restricted securities under Securities 

Act Rule 144. See Regulatory Flexibility Agenda, 

Securities Act Release No. 11118, Exchange Act 

Release No. 96009, Investment Advisers Act Release 

No. 6165; Investment Company Act Release No. 

34725, 88 Fed. Reg. 11376-01 (Feb. 22, 2023); 

Office of Info. and Regulatory Affairs, Office of 

Mgmt. and Budget, Agency Rule List—Fall 2022, 

SEC available at https://www.reginfo.gov/public/

do/eAgendaMain?operation=OPERATION_GET_

AGENCY_RULE_LIST¤tPub=true&agencyCo

de=&showStage=active&agencyCd=3235&Image58.

x=18&Image58.y=15&Image58=Submit (last visited 

May 19, 2023).

44 For example, there are a number of bills that, if 

enacted, would modify the accredited investor 

definition as well as other bills pertaining more 

generally to the regulation of private offerings under 

the Securities Act.

45 See SEC, Newsroom, SEC Proposals: Market Structure, 

available at https://www.sec.gov/newsroom/marketstructure-proposals-december-2022. 

46 See Proposed Rule, Disclosure of Order Execution 

Information, Exchange Act Rel. No. 96493, 88 Fed. 

Reg. 3786 at 3826 (Jan. 20, 2023). 

47 See, e.g., Proposed Rule, Disclosure of Order Execution 

Information, 88 Fed. Reg. 3786 at 3825 (“Would it be 

preferable for the Plan to establish the required format, 

including an associated schema, for the summary 

reports? ... Should the Commission require that 

summary Rule 605 reports be posted in a centralized 

location?”). 

48 See Market Data Infrastructure, Exchange Act Release 

No. 90610, 86 Fed. Reg. 18596 (Apr. 9, 2021), 

available at https://www.federalregister.gov/d/2020-

28370. 

49 See, e.g., Consolidated Tape Association, Order 

Disapproving 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. 95851, 87 Fed. Reg. 

58613 (Sept. 27, 2022), available at https://www.

federalregister.gov/d/2022-20833. 

50 See Proposed Rule, Short Position and Short Activity 

Reporting by Institutional Investment Managers, 

Exchange Act Release No. 94313, 87 Fed. Reg. 

14950 (Mar. 16, 2022), available at https://www.

federalregister.gov/d/2022-04670. 

51 See Proposed Rule, Reporting of Securities Loans, 

Exchange Act Release No. 93613, 86 Fed. Reg. 69802 

(Dec. 8, 2021), available at https://www.federalregister.

gov/d/2021-25739. 
36 | OFFICE OF THE INVESTOR ADVOCATE

52 See Financial Industry Regulatory Authority, 

Inc.; Order Instituting Proceedings To Determine 

Whether To Approve or Disapprove a Proposed Rule 

Change Relating to Alternative Display Facility New 

Entrant, Exchange Act Rel. No. 97195, 88 Fed. Reg. 

19173 (March 30, 2023), available at https://www.

federalregister.gov/d/2023-06557. 

53 See id., 88 Fed. Reg. at 19175. 

54 Outsourcing by Investment Advisers, Advisers Act 

Rel. No. 6176 (Oct. 26, 2022), 87 Fed. Reg. 68816 

(Nov. 16, 2022), available at https://www.govinfo.

gov/content/pkg/FR-2022-11-16/pdf/2022-23694.pdf. 

(“Outsourcing Proposal”).

55 See Outsourcing Proposal at 68817.

56 See id.

57 See id.

58 See Outsourcing Proposal at note 21 and 

accompanying text.

59 See Outsourcing Proposal at note 22 and 

accompanying text.

60 See Outsourcing Proposal at 68819 (“We have 

observed an increase in such outsourcing and issues 

related to the outsourcing and advisers’ oversight. One 

recent example is an enforcement action for alleged 

violations of section 206 of the Advisers Act against 

investment advisers that used models and volatility 

guidelines from a third-party subadviser without first 

confirming that they worked as intended. In another 

recent action, an adviser allegedly failed to oversee a 

third-party vendor that did not properly safeguard 

customers’ personal identifying information. . . . In 

response to our staff’s requests for documents, some 

advisers have not provided the information necessary 

to demonstrate compliance with the Advisers Act and 

its rules because of outsourcing. For example, some 

advisers that use client relationship management 

providers have asserted that they have complied with 

rule 204–3 because brochure delivery is programmed 

into the providers’ software, though they cannot 

produce records to evidence that delivery took place.”) 

(internal citations omitted).

61 See Outsourcing Proposal at section II.A.1.

62 See id.

63 See SEC Fact Sheet, Outsourcing by Investment 

Advisers, available at https://www.sec.gov/files/ia-6176-

fact-sheet.pdf. 

64 See id.

65 See, e.g., Comment Letter from Gail C. Bernstein, 

General Counsel, Investment Adviser Association, to the 

Commission re: Outsourcing by Investment Advisers 

(Dec. 23, 2022), available at https://www.sec.gov/

comments/s7-25-22/s72522-20153667-320948.pdf. 

66 See Investment Company Swing Pricing, Investment 

Company Act Rel. No. 32316 (Oct. 13, 2016), 81 Fed. 

Reg. 82084 (Nov. 18, 2016), available at https://www.

federalregister.gov/documents/2016/11/18/2016-25347/

investment-company-swing-pricing (“Swing Pricing 

Adopting Release”) at section II.A.1. 

67 See id.

68 See id at text accompanying note 11 (“Commission 

rules currently provide open-end funds with several 

tools to mitigate dilution from shareholder purchase 

or redemption activity and facilitate a fund’s ability 

to meet shareholder redemptions in a timely manner. 

These tools include a fund’s liquidity risk management 

program, the option to use swing pricing for certain 

funds, the ability to impose purchase or redemption 

fees, and/or the ability to redeem in kind.”).

69 See id.

70 See Open-End Fund Liquidity Risk Management 

Programs and Swing Pricing; Form N-PORT 

Reporting, Investment Company Act Release No. 

34726 (Nov. 2, 2022), 87 Fed. Reg. 77172 (Dec. 

16, 2022), available at https://www.federalregister.

gov/documents/2022/12/16/2022-24376/open-endfund-liquidity-risk-management-programs-andswing-pricing-form-n-port-reporting, at note 67 and 

accompanying text (“Today, no fund has implemented 

swing pricing, and funds rarely use redemption fees to 

address dilution other than in the case of short-term 

trading of fund shares, meaning shareholders may 

experience dilution both in normal and stressed 

conditions, particularly when purchases or redemptions 

are large or when funds invest in markets with high 

transaction costs relative to other markets.”).
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 37

71 See SEC, Press Release, SEC Proposes Enhancements 

to Open-End Fund Liquidity Framework (Nov. 2. 

2022), available at https://www.sec.gov/news/pressrelease/2022-199. 

72 Many commenters on the Commission’s Liquidity and 

Swing Pricing Proposal strongly oppose the proposed 

swing pricing requirement and an accompanying 

“hard close” requirement the Commission proposed 

to help effect swing pricing. See, e.g., Comment Letter 

of Investment Company Institute (Feb. 14, 2023), 

available at https://www.sec.gov/comments/s7-26-22/

s72622-20157306-325651.pdf (“We strongly oppose 

the hard close on mutual fund orders (typically set by 

most funds at 4:00 p.m. ET) and mandatory swing 

pricing for mutual funds. Neither fund experience 

nor the proposal’s economic analysis establishes that 

such costly measures are warranted. The harm and 

disruption for everyday mutual fund investors resulting 

from them would be far too high. Implementing a 

hard close would require significant systems rebuilds 

across the industry, affecting the entire fund ecosystem, 

including intermediaries such as broker-dealers 

and retirement plan recordkeepers, administrators, 

custodians, transfer agents, and the industry utility 

(DTCC). The cost, resources, and effort to build these 

systems would be enormous and lead to lost processing 

efficiencies.”).

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

74 See SEC’s Performance Goal #6: Investor Engagement 

Activities, available at https://www.sec.gov/files/

fy-2024-congressional-budget-justification_final-3-10.

pdf#page=117 (last visited June 1, 2023).

75 § 78d(g)(4), supra note 73.

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

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

78 As used in this report, the term “Ombuds” may 

refer to the Ombuds, the Ombuds and staff in the 

Ombuds Office, and, at times, to staff, contractors, and 

interns in the Office of the Investor Advocate directly 

supporting the Ombuds function.

79 See SEC, About the SEC, available at https://www.sec.

gov/about.shtml (last visited June 1, 2023).

80 To note, matters categorized as “Non-SEC/Other 

Matters” refer to matters outside the jurisdiction of 

the SEC, which fall within the jurisdiction of another 

regulatory agency. Matters characterized as “Atypical 

Matters” refer to matters where the submitter’s 

characterization or description of the issue makes it 

difficult to determine the nature of the complaint.

81 Advance fee frauds ask investors to pay a fee up 

front—in advance of receiving any proceeds, money, 

stock, or warrants—in order for the deal to go through. 

The advance payment may be described as a fee, tax, 

commission, or incidental expense that will be repaid 

later. Some advance fee schemes target investors who 

already purchased underperforming securities and 

offer to sell those securities if an “advance fee” is paid, 

or target investors who have already lost money in 

investment schemes, see Investor.gov, Protect Your 

Investments, Advance Fee Fraud, available at https://

www.investor.gov/protect-your-investments/fraud/

types-fraud/advance-fee-fraud.

The SEC’s Office of Investor Education and Advocacy 

has published a number of investor publications about 

advance fee fraud schemes on its website, available at 

https://www.investor.gov/. 

82 The SEC issued a press release regarding the market 

proposals, see SEC, SEC Proposals: Market Structure, 

available at https://www.sec.gov/newsroom/marketstructure-proposals-december-2022. The proposed rules 

are Regulation Best Execution; Order Competition 

Rule; Regulation NMS: Minimum Pricing Increments, 

Access Fees, and Transparency of Better Priced Orders; 

and Disclosure of Order Execution Information.

83 FINRA Rule 6440(a)(3), available at https://www.

finra.org/rules-guidance/rulebooks/finra-rules/6440-

0#the-rule (last visited June 1, 2023).

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

(ii).

85 See SEC, Office of the Investor Advocate, Report 

on Activities, Fiscal Year 2022 (Dec. 2022), available 

at https://www.sec.gov/files/fy22-oiad-sar-activitiesreport.pdf.
38 | OFFICE OF THE INVESTOR ADVOCATE

86 Id.

87 See FINRA Rule 13200, available at https://www.finra.

org/rules-guidance/rulebooks/finra-rules/13200 (last 

visited June 1, 2023).

88 See generally FINRA, Arbitration-Mediation Overview, 

available at https://www.finra.org/arbitrationmediation/overview (last visited June 1, 2023).

89 See, e.g., Petition for Rulemaking, George Brunelle, 

Brunelle & Hadjikow, P.C., Rulemaking Petition 

Regarding Complex Securities Arbitrations (Jul. 

19, 2016), available at https://www.sec.gov/rules/

petitions/2016/petn4-702.pdf.

90 See SEC, Exchange Act Rel. No. 34-96607, File No. 

SR-FINRA-2022-033 (“FINRA 2022-033”), 88 Fed. 

Reg. 2144 (Jan 12, 2023), available at https://www.

federalregister.gov/documents/2023/01/12/2023-00425/

self-regulatory-organizations-financial-industryregulatory-authority-inc-notice-of-filing-of-a.

91 Id.

92 See id. To note, FINRA currently describes this process 

on its website and in SEC filings.

93 Id. at 2145.

94 Id.

95 Id.

96 Id.

97 Id.

98 Id. at 2146. Investors may request that special 

proceedings be conducted telephonically with 60 days 

advance notice.

99 Id. Parties in simplified arbitrations are currently 

exempt from complying with this requirement.

100 Id. at 2149. Because the dismissal of all of a claimant’s 

claims would dispose the case, it is the current practice 

to require the issuance of an award in such dismissals. 

See also FINRA, Dispute Resolution Services 

Arbitrator’s Guide (2023), available at https://www.

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

101 See generally id. at 2147-8.

102 See Comment Letter from Hugh Berkson, President, 

Public Investors Advocate Bar Association (“PIABA”) 

(Feb. 1, 2023), available at https://www.sec.gov/

comments/sr-finra-2022-033/srfinra2022033-

20156362-324502.pdf (“PIABA Letter”); Comment 

Letter from William A. Jacobson, Esq., Director, 

Cornell Securities Law Clinic, Dustin Hartuv, Erik 

Olson and Jianing Zhao (Feb. 2, 2023), available at 

https://www.sec.gov/comments/sr-finra-2022-033/

srfinra2022033-20156446-324602.pdf (“Cornell 

Letter”); Comment Letter from Elissa Germaine, 

Supervising Attorney, Fairbridge Investor Rights Clinic, 

and Carolina Carasa, Roberto Quiroga (Feb. 2, 2023), 

available at https://www.sec.gov/comments/sr-finra2022-033/srfinra2022033-20156445-324601.pdf

(“Fairbridge Letter”); Comment Letter from Christine 

Lazaro, Director of the Securities Arbitration Clinic, St. 

John’s University, and Gavriel Rosenbaum, Julia Shea, 

Jacob Wetter (Feb 2. 2023), available at https://www.

sec.gov/comments/sr-finra-2022-033/srfinra2022033-

20156450-324629.pdf (“St. John’s Letter”).

103 See Fairbridge Letter, supra note 102 at 2-3.

104 See St. John’s Letter, supra note 102 at 2.

105 See id.

106 See Comment Letter from Kristine Vo, Assistant 

General Counsel and Office of General Counsel, 

FINRA (April 11, 2023) (“FINRA Letter”), available 

at https://www.sec.gov/comments/sr-finra-2022-033/

srfinra2022033-20164047-333995.pdf.

107 See FINRA Letter, supra note 106, at 8. See also SEC, 

Exchange Act Rel. No. 34-97291, File No. SR-FINRA2022-033, 88 Fed. Reg. 23720, 23723 (Apr. 18, 

2023), available at https://www.federalregister.gov/

documents/2023/04/18/2023-08145/self-regulatoryorganizations-financial-industry-regulatory-authorityinc-notice-of-filing-of.

108 See generally SEC, Exchange Act Rel. No. 34–97291; 

File No. SR–FINRA– 2022–033 (Apr. 12, 2023); 88 

Fed. Reg. 23720 (April 18, 2023), available at https://

www.finra.org/sites/default/files/2023-04/sr-finra-2022-

033-app-disapp.pdf.

109 See FINRA, Expungement of Customer Information, 

available at https://www.finra.org/rules-guidance/

key-topics/expungement (last visited June 1, 2023) 

(“Expungement, as an extraordinary remedy, should be 

recommended only in circumstances in accordance with 

FINRA rules to remove clearly inaccurate customer 

dispute information from the record of an individual 

broker that is associated with a broker-dealer firm.”).
REPORT ON OBJECTIVES: FISCAL YEAR 2024 | 39

110 See, e.g., PIABA and The PIABA Foundation, 

2021 Updated Study on FINRA Expungements, at 

5 (May 18, 2021), available at https://piaba.org/

system/files/2021-05/REPORT%20-%202021%20

Updated%20Study%20on%20FINRA%20

Expungements.pdf, (“Arbitrators have continued to 

grant expungement requests 90% of the time. . . .”).

111 See e.g., SEC, Office of the Investor Advocate, Report 

on Activities, Fiscal Year 2022 (Dec. 2022), at 52–54, 

available at https://www.sec.gov/files/fy22-oiad-saractivities-report.pdf.; SEC, Office of the Investor 

Advocate, Report on Objectives, Fiscal Year 2022 

(June 2022), at 31–34, available at https://www.

sec.gov/files/sec-office-investor-advocate-reportobjectives-fy2022.pdf.

112 See SEC, Exchange Act Rel. No. 34-95455; File No. 

SR-FINRA 2022-024 (Aug. 9, 2022); 87 Fed. Reg. 

50170 (Aug. 15, 2022), available at https://www.

federalregister.gov/documents/2022/08/15/2022-17430/

self-regulatory-organizations-financial-industryregulatory-authority-inc-notice-of-filing-of-a. 

113 FINRA 2022-024 was published for comment in the 

Federal Register on Aug. 9, 2022. On Sept. 27, 2022, 

FINRA consented to an extension of the period in 

which the Commission must approve the proposed 

rule change, disapprove the proposed rule change, or 

institute proceedings to determine whether to approve 

or disapprove the proposed rule change to Nov. 11, 

2022. On Nov. 10, 2022, FINRA responded to the 

comment letters received in response to the Notice 

and filed an amendment to the proposed rule change 

(“Amendment No. 1”). On Nov. 10, 2022, the 

Commission published a notice of filing of Amendment 

No. 1 and an order instituting proceedings to determine 

whether to approve or disapprove the proposed rule 

change, as modified by Amendment No. 1. On Dec. 

8, 2022, FINRA consented to an extension of the 

period in which the Commission must approve or 

disapprove the proposed rule change to Apr. 12, 2023. 

On Apr. 3, 2023, FINRA responded to the comment 

letters received in response to the Order Instituting 

Proceedings and filed a second amendment to the 

proposed rule change (“Amendment No. 2”). On Apr. 

19, the Commission published notice of approval of 

the proposed rule change, as modified by Amendments 

Nos. 1 and 2, on an accelerated basis, and solicited 

comments on Amendment No. 2 from interested 

persons. See SEC, Exchange Act Rel. No. 34-97294; 

File No. SR-FINRA-2022-024 (Apr. 12, 2023) 

(“FINRA 2022-24 Order”); 88 Fed. Reg. 24282 (Apr. 

19, 2023).

114 See FINRA 2022-024 Order, supra note 113, at 24282.

115 See id.

116 See Comment Letter from Mignon McLemore, 

Associate General Counsel, FINRA at 18-19, 

(Apr. 3, 2023), available at https://www.sec.gov/

comments/sr-finra-2022-024/srfinra2022024-

20163319-333785.pdf.

117 See FINRA, Expungement of Customer Information, 

supra note 109.

118 FINRA Rule 2080(b)(1), available at https://www.finra.

org/rules-guidance/rulebooks/finra-rules/2080 (last 

visited June 1, 2023).

119 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), available at https://www.sec.

gov/news/press/pressarchive/1997/97-101.txt. 

120 For more information on the significance of law school 

investor advocacy clinics to retail investors, see SEC, 

Office of the Investor Advocate, Report on Activities, 

Fiscal Year 2019, at 33-34 (Dec. 2019), available at 

https://www.sec.gov/files/sec-investor-advocate-reportactivities-2019.pdf.

121 For an overview of the Ombuds’ involvement with 

the law school clinics, see SEC, Office of the Investor 

Advocate, Report on Objectives, Fiscal Year 2023, at 

29 (June, 2022), available at https://www.sec.gov/files/

sec-office-investor-advocate-report-objectives-fy2023.

pdf. 

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

123 Id. 

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

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

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

127 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.”

128 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). 
40 | OFFICE OF THE INVESTOR ADVOCATE

129 SEC, Recommendation of the SEC Investor Advisory 

Committee to Improve Customer Account Statements 

to Better Inform Investors (Mar. 2, 2023), available at 

https://www.sec.gov/files/20230302-recommendationcustomer-account-statements.pdf. 

130 SEC, Recommendation of the SEC Investor Advisory 

Committee Regarding Accounting Modernization 

(Sept. 21, 2022), available at https://www.sec.gov/

spotlight/investor-advisory-committee-2012/20220921-

accounting-recommendation.pdf.

131 See Financial Accounting Foundation Debuts 

Enhanced Free Access to Online Accounting Standards 

Codification and Governmental Accounting Research 

System, Financial Accounting Foundation (Feb. 27, 

2023), available at https://accountingfoundation.org/

page/getarticle?uid=faf_MediaAdvisory-02-27-23. 

132 SEC, Recommendation of the SEC Investor Advisory 

Committee Related to Climate-Related Disclosure 

Rule Proposals (Sept. 21, 2022), available at https://

www.sec.gov/spotlight/investor-advisory-committee2012/20220921-climate-related-disclosurerecommendation.pdf.

133 See Proposed Rule, The Enhancement and 

Standardization of Climate-Related Disclosures for 

Investors, Securities Act Release No. 11042, Exchange 

Act Release No. 94478 (Mar. 21, 2022), 87 Fed. Reg. 

21334 (Apr. 11, 2022), available at https://www.

federalregister.gov/documents/2022/04/11/2022-06342/

the-enhancement-and-standardization-of-climaterelated-disclosures-for-investors.

134 SEC, Recommendation of the SEC Investor 

Advisory Committee Regarding Cybersecurity 

Risk Management, Strategy, Governance, and 

Incident Disclosure (Sept. 21, 2022), available at 

https://www.sec.gov/spotlight/investor-advisorycommittee-2012/20220921-cybersecurity-disclosurerecommendation.pdf.

135 See Proposed Rule, Cybersecurity Risk Management, 

Strategy, Governance, and Incident Disclosure, 

Securities Act Release No. 11038, Exchange Act 

Release No. 94382, Investment Company Act Release 

No. 34529 (Mar. 9, 2022), 87 Fed. Reg. 16590 (Mar. 

23, 2022), available at https://www.federalregister.gov/

documents/2022/03/23/2022-05480/cybersecurityrisk-management-strategy-governance-and-incidentdisclosure.

136 SEC, Recommendation of the SEC Investor Advisory 

Committee to Better Protect Older Adult Investors 

(June 9, 2022), available at https://www.sec.gov/

spotlight/investor-advisory-committee-2012/20220609-

protecting-older-investor-recommendation.pdf.

137 Press Release, SEC, SEC Unveils New Public Service 

Campaign Encouraging Older Investors to Never Stop 

Learning (June 12, 2023), available at https://www.sec.

gov/news/press-release/2023-106.

138 SEC, Recommendation of the SEC Investor Advisory 

Committee Regarding Investor Advocacy Clinic 

Funding (June 9, 2022), available at https://www.

sec.gov/spotlight/investor-advisory-committee2012/20220609-investor-clinic-recommendation.pdf.

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