The Urgent Need to Re‑establish the Investor Advisory Committee

Editor’s Note: Luis A. Aguilar is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on a statement by Commissioner Aguilar available here. The views expressed in the post are those of Commissioner Aguilar and do not necessarily reflect those of the Securities and Exchange Commission, the other Commissioners, or the Staff.

Recently, the Securities and Exchange Commission (“SEC”) announced the formation of a new Advisory Committee on Small and Emerging Companies (the “ACSEC”), pursuant to the Federal Advisory Committee Act. My vote to approve the establishment of the ACSEC was conditioned on the Investor Advisory Committee [1] being formed and operating prior to, or at the same time as, the formation of the ACSEC.

Advisory committees are an extraordinary way of providing input to the SEC. Establishing an advisory committee grants special access to a small group of representatives that is funded by public taxpayer money. This should not be done lightly. Since 1972, advisory committees have been subject to regulation under the Federal Advisory Committee Act. Concerned about inappropriate influence in public policy and waste of federal resources, [2] the Federal Advisory Committee Act seeks to ensure that resources are allocated responsibly and that the membership of each committee is “fairly balanced in terms of the points of view represented.” [3]

I look forward to receiving constructive input from the ACSEC. [4]

The SEC has a responsibility to inform itself when it engages in regulatory action, and it must take this responsibility seriously. I firmly believe the SEC should consider the views of the public and all interested parties. This includes small and emerging companies and other entities affected by the decisions of the SEC. Most importantly, this includes investors.

Following the market crisis that commenced in 2008, the SEC established its first ever Investor Advisory Committee in 2009. [5] When the original Investor Advisory Committee was formed, I stated “Investors need a greater voice at the Commission. The Commission’s traditional role as the investor’s advocate, as well as our deliberations, will be enhanced by the range of views the Advisory Committee will provide.” [6] This advisory committee was terminated before the expiration of its Charter, with the intention that it would be quickly re-constituted to meet the Commission’s statutory obligation under The Dodd-Frank Wall Street Reform and Consumer Protection Act. [7] This termination occurred in November 2010 and the committee has not yet been re-constituted.

In the current environment, revelations of egregious fraudulent conduct and recent market conditions continue to demonstrate the vulnerability of investors. Furthermore, the millions of American families trying to save for retirement, education and a better life are the same investors most impacted by the wild stock market swings we have witnessed, as the stock market has lost over a trillion dollars in value in the past two months.

Thus, the need to obtain the views of investors remains critical. I am disappointed that the Investor Advisory Committee has not been re-established. [8] I note that the SEC’s press release announcing the establishment of the ACSEC indicated that the SEC is in the process of re-establishing the Investor Advisory Committee. [9] However, the press release did not state a date or deadline by which this will occur.

The Investor Advisory Committee is essential to the SEC’s ongoing work. I strongly urge that the SEC’s Investor Advisory Committee be immediately re-established.


[1] See, Section 39 of the Securities Exchange Act of 1934, as amended.
(go back)

[2] See, e.g., Hearings on Advisory Committees before The Subcommittee on Intergovernmental Relations of the Senate Government Operations Committee, 92d Cong., 1 st Sess. (1971).
(go back)

[3] 41 CFR § 102–3.30; Federal Advisory Committee Act of 1972 §5(b)(2).
(go back)

[4] In that regard, I have requested that the membership of the ACSEC be monitored to ensure that the committee stays focused on small and emerging companies – defined by appropriate ceilings on assets, revenue and/or capitalization – and, in particular, on their investors.
(go back)

[5] SEC Announces Creation of Investor Advisory Committee, SEC Press Release, June 3, 2009,
(go back)

[6] Id.
(go back)

[7] Dodd-Frank Wall Street Reform and Consumer Protection Act § 911.
(go back)

[8] See also, the letter dated June 21, 2011 to Chairman Schapiro from US SIF, The Forum for Sustainable and Responsible Investment, “It will send a troubling message if this new small business advisory group is created while reconstitution of the Investor Advisory Committee … [continues] to be delayed.”
(go back)

[9] SEC Announces Formation of Advisory Committee on Small and Emerging Companies, SEC Press Release, September 12, 2011,
(go back)

Both comments and trackbacks are currently closed.