June 12, 2009

SEC Creates an Investor Advisory Committee

There is no doubt that the SEC has a laser-like focus on its investor protection mission these days. Recently, the SEC announced that it will be getting some help from a newly-established investor advisory committee. Commissioner Aguilar will serve as the Commission’s “sponsor” of the Committee, and it will be made up mostly of institutional investors and representatives of individual investor organizations.

The SEC said that the Advisory Committee’s main goals will be providing:

– advice to the Commission on areas of concern to investors;
– investors’ views on “current, non-enforcement, regulatory issues;” and
– information and recommendations to the Commission regarding regulatory programs.

The SEC is free to set up these sorts of advisory committees under the Federal Advisory Committee Act (5 U.S.C. App. 2 §§ 1-16), if it can be determined that the establishment of the advisory committee is in the public interest. An advisory committee can be established (15 days after the publication of a notice in the Federal Register) by filing a charter for the committee with the Senate Committee on Banking, Housing, and Urban Affairs and with the House Committee on Financial Services. A copy of the charter is also filed with the SEC Chairman, furnished to the Library of Congress, placed in the Public Reference Room at the SEC, and posted on the SEC’s site.

The charter for the committee must provide that the duties of the committee are to be solely advisory, and specify the time frame during which the committee will operate. The charter also provides that the SEC alone will make any determinations of action to be taken and policy to be expressed with respect to matters within the SEC’s authority that are recommended by the committee.

The advisory committee approach can be a useful way for the SEC to obtain a more detailed understanding of matters without expending scarce Staff resources. In my view, they seem to work best when they operate relatively independently and their specific agenda is not more or less directed by the SEC.

More on the “Shareholder Bill of Rights Act”

Broc has blogged about Senator Schumer’s bill and we have posted memos analyzing it in our “Regulatory Reform” Practice Area. Now, in this podcast, Colin Diamond of White & Case provides some insight into the Shareholder Bill of Rights Act, including:

– What are the provisions of the Shareholder Bill of Rights Act?
– Are any provisions of the bill not seen before in other similar bills?
– What are the odds of passage of the bill?
– What are the implications of the bill, if passed?

The Spoofed E-mail Caper

It seems like the last thing the SEC needs right now is some bizarre story of a mysterious, highly critical e-mail sent to its leadership and the press, but that is just what happened earlier this week in the strange case of the “spoofed” e-mail account. As noted in this WSJ article (see also this Bloomberg and Washington Post coverage), the four page e-mail appeared to be sent from an enforcement attorney’s e-mail account, and it was addressed to Chairman Schapiro, a number of other SEC officials and several reporters covering the SEC. The e-mail attacked the performance of Chairman Schapiro and SEC Inspector General David Kotz, and railed against a number of things at the agency, including the performance review process. The original story from the apparent sender was that her Blackberry was stolen, but it later turned out that the e-mail was sent from outside of the SEC’s network where someone had “spoofed” her e-mail address. (I know all about “spoofing,” having received about fifty Canadian pharmacy e-mails a day from myself over the past couple of years.)

From the description of the e-mail and the excerpts that have been reported, it sounds like the e-mail came from a very angry Staffer (or ex-Staffer). I can think of several crazy e-mail stories from my days at the SEC, but by and large those involved self-inflicted e-mail gaffes. Of course back in the good old days, I recall that these sorts of loose-cannon Staffer activities were carried out on pilfered letterhead, rather than by e-mail. No matter how it is done, it is really unbelievable that someone would go to such lengths to vent their frustration – they should really get another hobby.

– Dave Lynn