Minutes of the Meeting on April 9, 2015

The Investor Advisory Committee (IAC) met on April 9, 2015, in a public meeting that was transmitted live by webcast. The meeting convened at 9:40 a.m. in the multipurpose room of the Securities and Exchange Commission's headquarters in Washington, D.C.

The following persons attended the meeting:

Commissioners of the Securities and Exchange Commission

• Chair Mary Jo White (morning session only)
• Commissioner Michael S. Piwowar (morning session only)
• Commissioner Kara Stein (morning session only)

Advisory Committee Members[1]

• J. Robert Brown, Jr., Secretary and Acting Chairman
• Darcy Bradbury
• Joseph V. Carcello
• Eugene Duffy
• Rick Fleming
• Roger Ganser
• Craig Goettsch (by telephone)
• Stephen Holmes
• Adam M. Kanzer
• Roy Katzovicz
• Hester Peirce
• Barbara Roper
• Alan Schnitzer (by telephone)
• Anne Sheehan
• Damon Silvers (morning only)
• Steven Wallman
• Ann Yerger (by telephone)

Staff of the Securities and Exchange Commission

• Sarah Buescher, Branch Chief, Investment Adviser Regulation Office, Division of Investment Management
• David Fredrickson, Chief Counsel, Division of Corporation Finance
• Paula Jenson, Deputy Chief Counsel, Division of Trading and Markets
• Lori Schock, Director, Office of Investor Education and Advocacy

Outside Speaker

Michael Herndon, Consumer Outreach Officer, U.S. Commodity Futures Trading Commission

MORNING SESSION

Mr. Brown, serving as Acting Chairman, opened the meeting and invited SEC Chair White and the Commissioners to deliver opening remarks.

Chair White provided an update on the Commission’s priorities and rulemaking agenda.[2] Commissioners Stein and Piwowar followed with their opening remarks.

Mr. Fleming introduced Kevin Stemp, Managing Executive for several Commission offices, including the Office of the Investor Advocate.

February 12, 2015, Meeting Minutes Approval

Mr. Ganser moved to approve the minutes of the Committee’s previous meeting, which was held on February 12, 2015. Ms. Peirce seconded the motion. The Committee approved the minutes as presented without objection.

Nomination of Candidates for Officer Positions to Become Available Upon Expiration of Current Three-Year Terms

Mr. Brown began by describing the terms of office and the procedures for the nominations and elections for three officer positions: those of Vice Chairman, Secretary and Assistant Secretary. These elected officers would serve three-year terms beginning June 12, 2015, when the incumbents’ terms expire. The new three-year terms would be contingent on the elected officer’s continued membership in the Investor Advisory Committee. For most members, Mr. Brown noted, membership in the Committee would expire next year. If that proved to be the case for an elected officer, that person could continue as an officer only upon reappointment to the Committee.

Mr. Brown also explained that it was not yet time to hold elections for the Committee’s fourth officer position, that of the Chairman, because the incumbent, Mr. Schacht, had been elected on April 10, 2014, to a three-year term.

Turning to the voting process, Mr. Brown said that elections would take place during the non-public session immediately following the morning session, and that the Committee would report the results when it reconvened in public session for the afternoon. Mr. Brown also stated that, to be eligible to vote, Committee members were required to participate in the meeting in person or via telephone.

Mr. Brown then called for nominations. Mr. Goettsch (the current vice chairman) nominated Ms. Sheehan for vice chairman. Mr. Ganser nominated Mr. Brown (the current incumbent) for secretary. Mr. Schnitzer nominated Ms. Jean Setzfand (the current incumbent) for assistant secretary.

Mr. Goettsch moved to close the nominations, and Mr. Ganser seconded the motion. The motion carried without objection.

Discussion of Background Checks as a Means to Address Elder Financial Abuse

Ms. Sheehan, the chairman of the Investor as Owner Subcommittee, introduced the subcommittee’s recommendation to enhance investor access to information used to check the background of financial professionals. She presented the recommendation for discussion only, with the intention of presenting a revised recommendation for a vote at the next meeting in July.

To begin the discussion, Ms. Sheehan introduced three SEC staff members: Lori Shock, Director of the Office of Investor Education and Advocacy; Paula Jenson, Deputy Chief Counsel, Division of Trading and Markets; and Sarah Buescher, Branch Chief, Investment Adviser Regulation Office, Division of Investment Management.

Ms. Shock gave an Internet demonstration of how, using a single entry point, to access two public-facing databases—BrokerCheck and the Investor Advisory Public Database (IAPD)—to obtain information on the background of broker-dealers and registered investment advisers.

A discussion ensued, with Mr. Fleming inviting Commission staff to comment on the draft recommendation. In response, Ms. Jenson, Ms. Buescher and Ms. Schock all gave remarks.

Ms. Sheehan said that the subcommittee would make further enhancements to the draft and then recirculate it to members for their comments before presenting it at the next Committee meeting.

Discussion of CFTC Investor Behavior Survey Results

Mr. Ganser introduced Michael Herndon, Consumer Outreach Officer, U.S. Commodity Futures Trading Commission. He presented an overview of CFTC’s SmartCheck Campaign and the results of its investor survey.

Discussion of SEC Review of Exchange Act Rule 14a-8(i)(9) and Proxy Access

Ms. Sheehan said that the Investor as Owner Subcommittee would discuss the issue and decide whether to proceed with a recommendation on the current SEC staff review of Exchange Act Rule 14a-8(i)(9).

RECESS

The Committee went into recess at approximately 11:50 a.m. for lunch and non-public subcommittee meetings.

AFTERNOON SESSION

The public meeting resumed at approximately 2 p.m. Reviewing the schedule for the afternoon, Mr. Brown explained that a discussion about the Small and Emerging Business Advisory Committee and its recommendations would be removed from the agenda, because the Investor Advisory Committee had been unable to arrange for a speaker.

Officer Election Results

Mr. Brown announced the results of the elections, which had taken place in executive session. He reported that the Committee, with the requisite number of votes, had elected Jean Setzfand as Assistant Secretary, Mr. Brown as Secretary and Ms. Sheehan as Vice Chairman.

SEC Proxy Voting Roundtable Update

David Fredrickson, Chief Counsel, SEC Division of Corporation Finance, provided a summary of the SEC Proxy Voting Roundtable held on February 19. A discussion ensued.

Subcommittee Reports/Discussion

The heads of the four subcommittees—Ms. Sheehan, chairman of the Investor as Owner Subcommittee; Mr. Wallman, chairman of Market Structure Subcommittee; Ms. Roper, chairman of the Investor as Purchaser Subcommittee; and Mr. Ganser, chairman of the Investor Education Subcommittee—reported on the discussions each group had held over the lunch break.

Mr. Wallman, chairman of Market Structure Subcommittee, reported that Commissioner Piwowar had given a presentation to members of that subcommittee, with members of other subcommittees also attending.

CLOSING

The meeting was adjourned at approximately 2:50 p.m.