SEC's New Investor Advisor Committee Focuses On Investor Needs Rather Than Fiducairy Status Of Intermediaries

Wednesday, June 13, 2012 10:42
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SEC's New Investor Advisor Committee Focuses On Investor Needs Rather Than Fiducairy Status Of Intermediaries

Tags: Dodd-Frank | regulation | sec

Protecting retail investors and bolstering their confidence in the marketplace is the focus of the Investor Advisory Committee as it meets for the first time on Tuesday, June 13. SEC head Mary Schapiro feels the committee will be very instrumental in helping the SEC formulate its new definition and requirements for fiduciaries.

 

Consumer advocate Barbara Roper claims the greater benefit for retail investors would be to focus on regulating intermediaries from the standpoint of their fiduciary status.

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An Investor Advisory Committee was formed by the SEC in 2009 but the current committee conforms to mandates issued by the Dodd-Frank Act. Since individual investors are the primary source of capital for securities markets, it was argued that the focus on their needs would be the appropriate focus for the committee’s inaugural meeting.
 
The argument was based on the recent trend of investors to pull money out of equity mutual funds. The unwillingness of retail investors to be involved in the equities markets could reflect a shift in investment focus by the Baby Boomer generation as it ages. However, concern remains that retail investors may feel that the exchanges are geared heavily to benefit Wall Street firms instead of creating a level playing field for individuals.
 
Such concerns by individual investors could inhibit capital formation through investment in the equities markets. Allaying those concerns is, therefore, the top priority of the SEC’s Investor Advisory Committee.

 

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