Good morning. Nearly four years ago, I returned to the SEC as a Commissioner. That timeframe roughly corresponds to when a particular cohort of individuals were named to the SEC’s Investor Advisory Committee and began their terms. Today is the final Committee meeting for this cohort, who will complete their terms in the near future: Brian Schorr, Paul Roye, Colleen Honigsberg, James Andrus, Gina-Gail Fletcher, Christine Lazaro, Andrew Park, and Dr. David Rhoiney. Thank you for your service to the Committee and the investing public. I appreciate the significant time and effort that each of you have put into being a member of the Committee.
Today’s meeting will have panel discussions on public company disclosure reforms and fund proxy voting. Regulation S-K is the core public company disclosure framework governing non-financial information. Over the decades, Regulation S-K has ballooned into a laundry list of requirements that are sometimes duplicative, outdated, or immaterial. Last year, Commission staff were instructed to start a comprehensive review of Regulation S-K and solicited public input as part of the Commission’s efforts to modernize these long-standing disclosure requirements. I do not think that many people appreciate the significant effort it takes to provide good disclosure. It is much more than simply writing sentences on a document. For every disclosure, there are controls, procedures, documentation, and approvals that stand behind them. It is not a costless exercise. Thus, it is timely for the Committee to have a discussion on public company disclosure, especially as to what reforms might reduce unnecessary burdens on public companies without compromising investor protection and capital formation.
Today’s second panel will discuss fund proxy voting. Satisfying the quorum requirement has long been a challenge for funds, particularly when many retail investors hold their fund shares through intermediaries such as investment advisers or broker‑dealers. The rising costs associated with conducting fund proxy campaigns ultimately fall on fund shareholders and reduce fund performance. A well‑functioning proxy voting system is needed to ensure that funds can take actions in the interest of shareholders, such as adding board members, amending fundamental policies, or pursuing certain fund mergers to reduce expenses. I look forward to hearing your ideas on practical ways to modernize the fund proxy voting framework and the role the SEC should play in that effort.
Lastly, the Committee will be considering a draft recommendation on the tokenization of equity securities. This recommendation follows the Committee’s discussion of this issue at its last meeting in December. Throughout its history, the SEC has witnessed financial innovation that the federal securities laws did not originally contemplate. In the 1970s, money market funds emerged as a instrument to deal with the sky-high interest rates, prompting the Commission to issue exemptive relief until these products were ultimately codified in Rule 2a‑7. A similar pattern followed with ETFs, which began as a way to provide investors with intraday liquidity. For years, the Commission granted individual exemptions to allow ETFs to operate until adopting Rule 6c‑11. Tokenization of equity securities may be the next example of an innovation that could bring significant benefits to investors but does not fit neatly into the existing regulatory framework. I appreciate the Committee’s efforts to recognize that the advent of new technologies means that our rules may need to evolve but keeping in mind the goals of protecting investors and maintaining fair, orderly, and efficient markets.
Thank you to the Committee members and the panelists for your time in preparing for this meeting. I look forward to the discussions to follow.