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FISCAL YEAR 2023

Report on

Objectives

OFFICE OF THE INVESTOR ADVOCATE

REPORT ON OBJECTIVES

FISCAL YEAR 2023

Section 4(g) of the Securities Exchange Act of 1934 (Exchange Act), 15 U.S.C. § 78d(g), requires

the Investor Advocate to file two reports per year with the Committee on Banking, Housing,

and Urban Affairs of the Senate and the Committee on Financial Services of the House of

Representatives.1 A Report on Objectives is due no later than June 30 of each year, and its

purpose is to set forth the objectives of the Investor Advocate for the following fiscal year.2 The

instant report contains a summary of the Investor Advocate’s primary objectives for Fiscal Year

2023, beginning October 1, 2022.

A Report on Activities is due no later than December 31 of each year, and it describes the

activities of the Investor Advocate during the preceding fiscal year.3 For Fiscal Year 2023, the

activities and accomplishments of the Office will be reported not later than December 31, 2023.

Disclaimer: Pursuant to Section 4(g)(6)(B)(iii) of the Exchange Act, 15 U.S.C. § 78d(g)(6)(B)(iii), this

Report is provided directly to Congress without any prior review or comment from the Commission, any

Commissioner, any other officer or employee of the Commission, or the Office of Management and Budget.

Thus, the Report expresses solely the views of the Investor Advocate. It does not necessarily reflect the

views of the Commission, the Commissioners, or staff of the Commission, and the Commission disclaims

responsibility for the Report and all analyses, findings, and conclusions contained herein.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

CONTENTS

MESSAGE FROM THE INVESTOR ADVOCATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

OBJECTIVES OF THE INVESTOR ADVOCATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

POLICY AGENDA FOR FISCAL YEAR 2023. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Crypto-Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Equity Market Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Private Fund Adviser Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ESG Disclosures for Public Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ESG Disclosures for Investment Advisers and Investment Companies. . . . . . . . . . . . . . . 12

Fund Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Open and Machine-Readable Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

OMBUDSMAN’S REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Ombudsman Role and Standards of Practice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Streamlined Communications with Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . . . 21

Service by the Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23

Areas of Interest and Importance to Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . .24

Acting in the Interests of Retail Investors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Ombudsman Outreach and Engagement Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . .29

Objectives and Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32

SUMMARY OF INVESTOR ADVISORY COMMITTEE RECOMMENDATIONS AND

SEC RESPONSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33

ENDNOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

REPORT ON OBJECTIVES: FISCAL YEAR 2023

iii

MESSAGE FROM THE

INVESTOR ADVOCATE

ach year, the Office of the Investor

Advocate submits two reports to

Congress—a Report on Objectives that

looks forward and describes the objectives of the

Office for the upcoming fiscal year, and a Report on

Activities that looks backward to describe the work

performed by the Office during the preceding fiscal

year. After eight years as the Investor Advocate, I

am stepping down from the role on July 1, and I

am gratified that my final report to Congress will be

one that looks forward.

This report describes some of the issues and

challenges that the Office of the Investor Advocate

will grapple with in the coming fiscal year. As

always, we identify areas in which the staff

undoubtedly will devote significant time and

energy, such as crypto assets and ESG, but we

cannot predict everything that will arise and require

our attention. This is especially true at a time

like this, when a new Investor Advocate will be

appointed, bringing new priorities and interests.

The new Investor Advocate will also appoint a

new Ombudsman to replace Tracey McNeil, who

recently departed the agency for a new opportunity

after serving as the inaugural SEC Ombudsman and

establishing an office that will have a lasting impact

for investors.

Until a new Investor Advocate is appointed, the

Office of the Investor Advocate will be led by Marc

Sharma, who will continue in his longstanding role

as Chief Counsel while helping to administer the

functions of the Office. Latisha Brown will serve as

the Acting Ombudsman.

After the leadership

transitions are complete,

the new permanent

Investor Advocate and

Ombudsman will benefit

from the true strength of

the Office of the Investor

Advocate—its people.

The men and women in

the Office are passionate

about serving investors,

and their expertise and wisdom are the fuel for

the Office’s advocacy efforts. Many of the policy

issues we confront are not easy, even when looking

at them purely from the standpoint of serving the

best interests of investors. For example, the practice

known as payment for order flow creates conflicts

of interest that may harm investors, yet it has

contributed to a significant decline in commissions

that investors must pay to trade securities. Staff in

the Office have a deep understanding of complex

REPORT ON OBJECTIVES: FISCAL YEAR 2023

issues like these, can explain them in understandable

terms, and exhibit extraordinary judgment in

recommending policy positions for the Investor

Advocate’s consideration. Similarly, as described

below in the report of the Ombudsman, staff for

the Ombudsman regularly confront challenging

issues and do the difficult work of providing

direct service to investors, and the new permanent

Ombudsman will benefit from the many lessons

they have learned.

Less known, but with the potential for the greatest

long-term impact for investors, are our efforts to

build a library of research that will contribute to

data-driven advocacy and, we hope, data-driven

policymaking. We recently established the Office

of Investor Research within the Office of the

Investor Advocate, and its role will be to collect

data regarding investor demographics, investing

trends, etc., and to study how to improve the

disclosure of important information to investors.

The Commission, as an agency dedicated to investor

protection, historically has conducted little research

of this nature, and we are excited about the ways

that our research program will be able to provide

critical insights for future decision-making.

It is a privilege to submit this report on the

objectives of the Office of the Investor Advocate

for Fiscal Year 2023. It has been an honor to serve

as the first Investor Advocate at the U.S. Securities

and Exchange Commission, and I am proud of the

foundation that I have built along with the other

pioneers who joined me and sculpted new roles

with such high impact—people like Tracey McNeil,

Marc Sharma, Stephen Deane, Ashlee Steinnerd,

and Frankie White, who arrived during my first

year, as well as the many others who joined us

along the way. I am confident that new leadership

will build even bigger and better things upon the

foundation we have laid, and I look forward to

witnessing the future successes of the Office.

Respectfully Submitted,

Rick A. Fleming

Investor Advocate

O F F I C E O F T H E I N V E S T O R A D V O C AT E

OBJECTIVES OF THE

INVESTOR ADVOCATE

s set forth in Exchange Act Section 4(g)

(4), 15 U.S.C. § 78d(g)(4), the Investor

Advocate is required to perform the

following functions:

(A) assist retail investors in resolving

significant problems such investors

may have with the Commission or with

self-regulatory organizations (SROs);

(B) identify areas in which investors

would benefit from changes in the

regulations of the Commission or the

Assisting Retail Investors

Exchange Act Section 4(g)(4)(A) directs the

Investor Advocate to assist retail investors in

resolving significant problems such investors may

have with the Commission or with SROs.4 To help

accomplish that objective, the Investor Advocate

has appointed an Ombudsman to, among other

things, act as a liaison between the Commission

and any retail investor in resolving problems that

retail investors may have with the Commission or

with SROs.5 As required by statute, a semi-annual

report from the Ombudsman is included within this

Report on Objectives.6

rules of SROs;

with financial service providers and

investment products;

(D) analyze the potential impact on

investors of proposed regulations of

the Commission and rules of SROs;

and

(E) to the extent practicable, propose

to the Commission changes in

the regulations or orders of the

Commission and to Congress any

legislative, administrative, or personnel

changes that may be appropriate to

mitigate problems identified and to

promote the interests of investors.

Identifying Areas in Which Investors Would

Benefit from Regulatory Changes

Exchange Act Section 4(g)(4)(B) requires the

Investor Advocate to identify areas in which

investors would benefit from changes in the

regulations of the Commission or the rules of

SROs.7 This is a broad mandate that authorizes the

Investor Advocate to examine the entire regulatory

scheme, including existing rules and regulations,

to identify those areas that could be improved for

the benefit of investors. For example, the Investor

Advocate may look at the rules and regulations

governing existing equity market structure to

determine whether any regulatory changes would

benefit investors. These and other concerns are

discussed in greater detail below in the section

entitled Policy Agenda for Fiscal Year 2023.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Identifying Problems with Financial Service

Providers and Investment Products

Exchange Act Section 4(g)(4)(C) requires the

Investor Advocate to identify problems that

investors have with financial service providers

and investment products.8 The Investor

Advocate continues to monitor investor inquiries

and complaints, SEC and SRO staff reports,

enforcement actions, and other data to determine

which financial service providers and investment

products may be problematic. As required by

Exchange Act Section 4(g)(6), these problems will

be described in the Reports on Activities to be filed

in December of each year.

Proposing Appropriate Changes to the

Commission and to Congress

Exchange Act Section 4(g)(4)(E) provides that,

to the extent practicable, the Investor Advocate

may propose to the Commission changes in the

regulations or orders of the Commission and

to Congress any legislative, administrative, or

personnel changes that may be appropriate to

mitigate problems identified and to promote the

interests of investors.10 As we study the issues in

our Policy Agenda for Fiscal Year 2023, as set forth

below, we will likely make recommendations to the

Commission and Congress for changes that will

promote the interests of investors.

Analyzing the Potential Impact on Investors

of Proposed Rules and Regulations

Exchange Act Section 4(g)(4)(D) directs the

Investor Advocate to analyze the potential impact

on investors of proposed regulations of the

Commission and proposed rules of SROs.9 As

required, in Fiscal Year 2023, the Office will review

all significant rulemakings of the Commission and

SROs, and we will communicate with investors

and their representatives to determine the potential

impact of proposed rules. In addition, we will

study investor behavior and utilize a variety of

research methods to examine the efficacy of

policy proposals. For example, we will study

the effectiveness of various disclosures that are

provided to retail investors. We include descriptions

of our research projects and related findings in our

Reports on Activities, published every December.

Supporting the Investor

Advisory Committee

Exchange Act Section 39 establishes the Investor

Advisory Committee (IAC).11 As discussed in

greater detail below in the section entitled

Summary of Investor Advisory Committee

Recommendations and SEC Responses, the

purpose of the Committee is to advise and consult

with the Commission on regulatory priorities,

issues impacting investors, initiatives to protect

investors, and related matters. The Investor

Advocate is a member of the IAC,12 and the Office

will continue to provide staff and operational

support to the IAC during Fiscal Year 2023.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

POLICY AGENDA FOR

FISCAL YEAR 2023

s described above, the statutory mandate

for the Office of the Investor Advocate

is broad, and much of our time is

consumed with the review of rulemakings that

flow through the Commission and SROs. We

monitor all rulemakings, but we prioritize certain

issues so that we can develop expertise in those

areas and maximize our impact for investors with

the resources we have available. After discussions

with numerous knowledgeable parties, both

inside and outside the Commission, and after

due consideration, the Office will focus upon the

following issues during Fiscal Year 2023:

CRYPTO-ASSETS

Crypto-Assets

Equity Market Structure

Private Fund Adviser Regulation

ESG Disclosures for Public Companies

ESG Disclosures for Investment Advisers and

Investment Companies

§ Fund Names

§ Open and Machine-Readable Data

The surge in the transaction volume of cryptoasset markets has been accompanied by a two-fold

increase in illicit crypto-asset activity from 2020

for a total of $14 billion in 2021.14 As retail

investor interest in crypto-assets has increased,

so have the size and frequency of crypto-asset

fraud and investment scams.15 The proliferation

of fraud in the crypto-asset markets has prompted

the SEC’s Division of Enforcement to increase the

staffing of the specialized unit handling some of

the crypto-asset related enforcement actions.16 The

Division of Enforcement recognizes that, going

forward, many enforcement actions may involve

some crypto-asset component.

Crypto-assets, already a volatile asset class, have

been impacted by the intense financial market

fluctuations during the first few months of 2022.

In 2021, for instance, crypto-asset markets’

transaction volume grew to $15.8 trillion, an

increase of nearly 600 percent over calendar year

2020, as investor interest in the asset class grew.13

So far in 2022, transaction volume has continued

to increase—to $25 trillion—but much of the

increase in transaction volume was due to the fact

that so many investors abandoned the asset class

during the first few months of this year.

As in past years, other issues are likely to arise that

will require the attention of the Office. Moreover,

with the appointment of a new Investor Advocate,

the priorities of the Office may evolve during Fiscal

Year 2023.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Amid all the market volatility, there have been

a number of regulatory developments in the

crypto-asset space. On February 14, 2022, for

example, the Commission charged BlockFi Lending

LLC (BlockFi) with violations of the Investment

Company Act of 1940 that resulted in its failure

to register the offers and sales of its retail crypto

lending product.17 In its settlement with the

Commission, BlockFi agreed to pay a $50 million

penalty, cease sales of its product, and attempt to

attain registration under the Investment Company

Act. Then, in an April 4, 2022 speech, SEC Chair

Gary Gensler identified various deficiencies in the

integrity and investor protections of crypto-asset

markets.18 As Chair Gensler stated, “[t]here’s no

reason to treat the crypto market differently just

because different technology is used. We should

be technology-neutral.”19 Chair Gensler’s remarks

may have proved prescient, for in May 2022,

two stablecoins lost their peg and one of them

ultimately failed, costing investors approximately

$40 billion in losses.20 Inevitably, questions of

financial stability of crypto-assets have intensified.21

An important linchpin of investor protection in

crypto-asset markets is the custody of assets, and

there is an expanding list of firms claiming to offer

those services.22 As we explained in our Report

on Objectives for Fiscal Year 2022, custody of

crypto-assets generally involves the management

of the cryptographic private keys used to execute

transactions.23 Due to recent Commission staff

guidance, firms that offer custodial services

of crypto-assets will have direction on how to

record those custodial services on their financial

statements. In Staff Accounting Bulletin No. 121

(SAB 121), Commission staff set out the accounting

treatment for custodial services of crypto-assets.24

Specifically, SAB 121 requires firms to record a

safeguarding liability and a corresponding asset,

separate from the underlying crypto-asset, at

O F F I C E O F T H E I N V E S T O R A D V O C AT E

the fair value of the underlying crypto-asset.

We believe that, on balance, SAB 121 provides

valuable guidance on the accounting treatment

of custodial services for crypto-assets. In Fiscal

Year 2023, we will continue to monitor

developments related to the custody of cryptoassets, and we will advocate for policies that

reduce the risks of misappropriation and other

types of unethical conduct.

Another important consideration for investor

protection is the extent to which the exchanges

that facilitate crypto-asset trading should be

regulated like traditional stock exchanges. Investors

are protected by a fulsome panoply of rules that

govern trading on traditional exchanges, such as

fair access rules, market data rules, and corporate

governance rules. Many questions remain with

respect to the practicality of applying those types of

rules within the context of crypto trading, and we

will be active in our pursuit of policies that bring

crypto-related investor protections more in line

with the exchange rules that have served investors

so well over the decades.

EQUITY MARKET STRUCTURE

As noted in our prior Reports on Objectives, the

Commission has been engaged in a multi-year

effort to improve the environment for modern

trading.25 We have supported a number of

regulatory proposals that were recently adopted,

including a proposal from the exchanges and

the Financial Industry Regulatory Authority

(FINRA) to modernize the governance of

National Market System (NMS) plans that

produce public consolidated equity market data

and that disseminate trade and quote data from

trading venues.26 This new governance structure

should reduce inherent conflicts of interest, in

no small part by providing for non-SRO voting

representatives on the operating committees for the

NMS plans. In Fiscal Year 2023, we will support

improvements to the governance of NMS plans

that include the appropriate representation of retail

and institutional investors.

During Fiscal Year 2023, we intend to continue our

engagement on numerous other relevant initiatives

that we hope the Commission will continue to

prioritize in the near future, including:

We also continue to support efforts to modernize

the overall infrastructure for the collection,

consolidation, and dissemination of market data

for NMS stocks.27 Retail investors may benefit

from the improved content and competitive

infrastructure for quotation and trading data, either

directly or as participants in mutual funds and

pension funds. In February 2022, the Commission

instituted proceedings to determine whether to

approve or disapprove the SROs’ proposed fee

schedule for the expanded content required by

the Commission rule.28 Commenters have raised

significant issues with the current proposal from

the exchanges, arguing that the fees are based

on flawed methodologies and fail to provide a

cost-based justification.29

§ Shortening the security settlement period in

the U.S. financial markets from a two-day

settlement (referred to as T+2) to one-day

(or shorter) for transactions in U.S. equities,

corporate and municipal bonds, and unit

investment trusts.33 This not only would

respond to the IAC’s 2015 recommendation on

the matter,34 but it also could reduce behindthe-scenes regulatory requirements that may

have contributed to retail investor confusion

and frustration during a period of volatile stock

trading in January 2021.35

In addition, we support the full implementation

of the Commission’s Consolidated Audit Trail, or

CAT. This system, years in the making, is intended

to enhance, centralize, and generally update the

regulatory data infrastructure available to market

regulators.30 Full implementation should occur in

the fourth quarter of 2022,31 and in Fiscal Year

2023, we will encourage the Commission to use

CAT data to improve its regulatory processes. We

will also consider ways to enhance the CAT. For

example, in October 2020, the Commission sought

public comment on amendments to enhance data

security for the CAT database,32 and we continue

to consider the helpful comments provided in

response to that request.

§ Enhancements to the rules governing transfer

agents, as previously discussed in a December

2015 advanced notice of rulemaking and a

concept release,36 which could, in part, specify

transfer agent obligations with respect to the

tracking and removal of restrictive legends. If

improved rules can prevent the improper or

inappropriate removal of a legend, investors

would be better protected from the harm that

comes from the illegal public distribution of

such securities.

§ Studying and addressing the potential conflicts

of interest created by exchange fees and rebates

in connection with broker-dealer order routing

behavior. In addition, we support efforts to

evaluate the impact of “payment for order

flow” by market makers when broker-dealers

make off-exchange order routing decisions,

especially in light of the retail trading experience

during January 2021.37

REPORT ON OBJECTIVES: FISCAL YEAR 2023

§ Enhance transparency in short selling as well

as the opaque network of stock lending and

borrowing that facilitates the practice.38 The

period of volatile stock trading in January

2021, in several cases involving companies with

significant short interest, raised a number of

policy questions. Having a repository of relevant

data could improve the Commission’s ability

to monitor this area of the market in real time.

Further, additional guidance concerning what

constitutes a broker-dealer’s reasonable basis

for the “locate” requirement for heavily shorted

companies should be considered.

In addition to evaluating rulemaking by the

Commission during Fiscal Year 2023, we will

continue to examine the hundreds of rule proposals

that are filed with the Commission by the SROs.

Typically, a number of these filings involve market

structure issues that impact investors. For example,

in January 2022, the Commission approved

a proposal from the CBOE BYX Exchange,

Inc. to make clarifying changes to a periodic

auction process it had adopted in 2021.39 We are

encouraged that the exchange sought to improve

its rule language in advance of implementing the

potentially game-changing process, and we will

monitor the exchange’s implementation of these

periodic auctions with an eye toward the impact on

retail investors.

PRIVATE FUND ADVISER REGULATION

With more than $18 trillion in gross assets, private

funds and their advisers play an important role

in our financial markets and the lives of everyday

Americans. Some of the largest private fund

investors include state, municipal, and private

pension plans that provide retirement and other

benefits to the American public. In Fiscal Year

2023, we will monitor the progress of new rules

and amendments intended to enhance regulation

O F F I C E O F T H E I N V E S T O R A D V O C AT E

of private fund advisers, as proposed by the

Commission on February 9, 2022, under the

Investment Advisers Act of 1940 (Advisers Act).40

This is a rulemaking of significant magnitude and,

if adopted, will have far-reaching consequences. As

Chair Gensler has noted, “[p]rivate fund advisers,

through the funds they manage, touch so much

of our economy. Thus, it’s worth asking whether

we can promote more efficiency, competition,

and transparency in this field.”41 In approving the

proposal, the Commission indicated that “[t]he

proposed reforms are designed to protect private

fund investors by increasing their visibility into

certain practices, establishing requirements to

address practices that have the potential to lead to

investor harm, and prohibiting adviser activity that

is contrary to the public interest and the protection

of investors.”42

Specifically, if adopted as proposed, the new rules

and amendments would include the following:

§ Quarterly Statement Rule. The proposal

would require registered private fund advisers

to distribute a quarterly statement to private

fund investors with a detailed accounting

of all fees and expenses paid by the private

fund during the reporting period. In addition,

the statement would disclose information

regarding compensation or other amounts paid

by the private fund’s portfolio investments

to the adviser or any of its related persons.

The proposal also would require advisers to

provide information regarding the private

fund’s performance. For liquid funds, the

quarterly statement would provide annual net

total returns since inception, average annual

net total returns over prescribed time periods,

and quarterly net total returns for the current

calendar year. For illiquid funds, the statement

would provide the gross and net internal

rate of return and gross and net multiple of

invested capital for the illiquid fund to capture

performance from the fund’s inception through

the end of the current calendar quarter.43

in structuring and leading a transaction from

which it may stand to profit at the expense of

private fund investors.45

§ Private Fund Audit Rule. The proposal would

require registered private fund advisers to cause

the private funds they advise to undergo a

financial statement audit at least annually and

upon liquidation. The proposal would require

the audited financial statements to be distributed

to investors promptly after the completion of the

audit. These audits would provide an important

check on the adviser’s valuation of private fund

assets, which often serve as the basis for the

calculation of the adviser’s fees, and protect

private fund investors against misappropriation

of fund assets.44

§ Adviser-Led Secondaries Rule. The proposal

would require a registered private fund adviser

to obtain a fairness opinion in connection

with an adviser-led secondary transaction. In

these transactions, advisers often offer existing

fund investors the option to sell or exchange

their interests in the private fund for interests

in another vehicle advised by the adviser. An

independent opinion provider would opine on

the fairness of the price being offered to the

private fund for any assets being sold as part

of the transaction. The proposal also would

require the adviser to prepare and distribute to

the private fund investors a summary of any

material business relationships the independent

opinion provider has or has had within the past

two years with the adviser or any of its related

persons. This requirement would provide a

check against an adviser’s conflicts of interest

§ Prohibited Activities Rule. The proposal would

prohibit all private fund advisers from engaging

in certain activities and practices that tend to

create conflicts of interest that could reasonably

lead to fraud and investor harm because such

practices incentivize an adviser to place its

interests ahead of the private fund’s interests.46

These practices include:

» Charging certain fees and expenses to a

private fund or its portfolio investments,

such as fees for unperformed services

(e.g., accelerated monitoring fees) and

fees associated with an examination or

investigation of the adviser;

» Seeking reimbursement, indemnification,

exculpation, or limitation of its liability for

certain activity;

» Reducing the amount of an adviser clawback

by the amount of certain taxes;

» Charging fees or expenses related to a

portfolio investment on a non-pro rata basis;

and

» Borrowing or receiving an extension of credit

from a private fund client.

§ Preferential Treatment Rule. The proposal

would prohibit all private fund advisers

from providing preferential terms to certain

investors regarding redemptions from the fund

or information about portfolio holdings or

exposures. It also would prohibit all private

fund advisers from providing other preferential

treatment unless disclosed to current and

prospective investors. This proposal is designed

to protect investors by prohibiting specific types

of preferential treatment that have a material,

negative effect on other investors.47

REPORT ON OBJECTIVES: FISCAL YEAR 2023

§ Books and Records Rule Amendments. The

proposal includes amendments to the books

and records rule under the Advisers Act that

require advisers to retain records related to

the proposed rules. The amendments would

facilitate the SEC’s ability to assess an adviser’s

compliance with the proposed rules.48

§ Compliance Rule Amendments. The proposal

includes amendments to the compliance rule

under the Advisers Act that require all registered

advisers, including those that do not advise

private funds, to document their annual review

in writing.49

We believe this package of reforms could provide

significant benefits for investors in private

markets. However, commenters have noted the

breadth of the proposed reforms, and some

have argued that the proposals could lead to

unintended consequences for investors, such as

the imposition of substantial compliance costs

and the difficulty of attracting subsequent capital

infusions into the fund. We are evaluating these

concerns and look forward to working with

our colleagues in the Division of Investment

Management as the initiative progresses through

the rulemaking process.

ESG DISCLOSURES FOR PUBLIC

COMPANIES

For a number of years, investors have been

demanding more information about the risks

attending Environmental, Social, and Governance

(ESG) matters.50 ESG assets reportedly surpassed

$35 trillion in 2020, up from $30.6 trillion in 2018

and $22.8 trillion in 2016.51 By some indications,

global ESG assets may exceed $41 trillion in

2022 and $50 trillion by 2025. A recent survey

by a major auditing firm found that investors

increasingly are willing to take action if they

believe certain companies are not addressing ESG

issues adequately, including seeking to engage the

O F F I C E O F T H E I N V E S T O R A D V O C AT E

company in dialogue, voting against executive

compensation agreements, seeking inclusion of ESG

targets in executive pay, voting against director

appointments and, in some cases, even divesting

their holdings from such companies.52

There is ample evidence of investor demand

for ESG disclosure and the clamor for such

information can no longer be ignored. We believe

that ESG information is often decision-useful,

and we have a history of support for high-quality,

consistent, and comparable ESG disclosure. Most

recently, in our Report on Objectives for Fiscal

Year 2022, we argued that while principles-based

ESG measures are more flexible and can generate

information for investors that is most relevant

within the context of a particular business,

principles-based requirements tend to generate

disclosures that can be difficult to compare across

a variety of companies.53 For that reason, we have

advocated for prescriptive requirements to promote

comparability wherever possible, particularly with

respect to disclosure requirements for objectivelydeterminable facts.

Climate-Related Disclosures

On March 21, 2022, the Commission proposed

certain climate-related disclosures for investors,

partly in response to the intense and long-standing

investor interest in ESG disclosure.54 The

proposal, if adopted, would require registrants

to provide certain climate-related information in

their registration statements and annual reports,

including information about climate-related

financial risks and climate-related financial metrics

in their financial statements.55 According to the

Commission, the disclosure of this information

would provide consistent, comparable, and

reliable—and therefore decision-useful—

information to investors to enable them to make

informed judgments about the impact of climaterelated risks on current and potential investments.56

One particular area of focus in the proposal is

greenhouse gas (GHG) emissions. Generally,

the proposal would require public companies

to disclose information about the following:

§ The registrant’s direct GHG emissions

(Scope 1) and indirect GHG emissions from

purchased electricity and other forms of

energy (Scope 2), separately disclosed,

expressed both by disaggregated constituent

greenhouse gases and in the aggregate, and in

absolute terms, not including offsets, and in

terms of intensity (per unit of economic value

or production); and

§ Indirect emissions from upstream and

downstream activities in a registrant’s value

chain (Scope 3), if material, or if the registrant

has set a GHG emissions target or goal that

includes Scope 3 emissions, in absolute terms,

not including offsets, and in terms of intensity.57

The proposed disclosure of Scope 3 GHG emissions

in particular has generated stiff debate over how to

measure such emissions, what to include as Scope

3 emissions, and what Scope 3 information would

be material.58 In apparent recognition of these more

difficult questions, the proposal would exempt

Scope 3 emissions disclosure from the attestation

requirements that apply to Scope 1 and Scope 2

emissions. In addition, the proposal offers some

workarounds for Scope 3 emissions disclosure:

§ A safe harbor for Scope 3 emissions disclosure

from certain forms of liability under the federal

securities laws;

§ An exemption for smaller reporting companies

(SRCs) from the Scope 3 emissions disclosure

provision; and

§ A delayed compliance date for Scope 3

emissions disclosure.59

The proposal indicates that disclosures about

climate-related risks and metrics reflecting those

risks can have an impact on public companies’

financial performance or position and may be

material to investors in making investment or

voting decisions.60 The proposal notes that many

investors—including shareholders, investment

advisers, and investment management companies—

already seek information about climate-related

risks from companies to inform their investment

decision-making.61

We are mindful of the diversity of viewpoints

associated with ESG disclosure, and we look

forward to reviewing the comments submitted

in response to the Commission’s climate-related

disclosure proposal. As we indicated in our Report

on Objectives for Fiscal Year 2022, we will help

ensure that, as the Commission works through this

complicated rulemaking, investors’ interests remain

at the forefront of the discussion.

Human Capital

A company’s workforce is a key source of value,

and investors benefit when they can look to the

Commission’s corporate disclosure system to

evaluate material facts related to public companies’

human capital management (HCM). Recognizing

the importance of such information, in March

2019, the IAC recommended that the Commission

incorporate HCM as part of the Commission’s

“Disclosure Effectiveness Review” and its overall

approach to modernizing corporate reporting and

disclosure.62 Further, the IAC recommended that

the Commission consider both:

§ Requiring registrants to comply with principlesbased disclosure requirements asking them to

detail their HCM policies and strategies; and

§ Developing metrics to evaluate the success of

HCM strategies and investments that can reflect

the varied circumstances of different businesses.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

We are pleased that HCM disclosure remains on

the Commission’s regulatory agenda, as made

public pursuant to the Regulatory Flexibility Act.63

We look forward to working with Commission

staff to develop HCM disclosures that are decisionuseful for investors.

ESG DISCLOSURES FOR

INVESTMENT ADVISERS AND

INVESTMENT COMPANIES

We will also monitor the progress of amendments

to rules and reporting forms proposed by the

Commission on May 25, 2022, to promote

consistent, comparable, and reliable information

for investors concerning funds’ and advisers’

incorporation of ESG factors.64 According to

Chair Gensler, it is “important that investors have

consistent and comparable disclosures about asset

managers’ ESG strategies so they can understand

what data underlies funds’ claims and choose the

right investments for them.”65 We agree.

While ESG strategies have existed for decades,

interest in these strategies has rapidly increased

in recent years, with significant inflows of capital

to ESG-related investment products and advisory

services. Asset managers have responded to the

increased demand by creating and marketing ESG

products.66 In the U.S. alone, in 2021 there were

approximately 740 mutual funds and ETFs with

assets totaling $549 billion that could be considered

as investing according to ESG criteria.67 ESG funds

reportedly attracted $649 billion globally in the

first eleven months of 2021, up from $542 billion

in all of 2020 and $285 billion in 2019.68

Currently, the ways that different funds and

advisers define ESG can vary widely. Similarly,

there are significant differences in the data, criteria,

and strategies used as part of ESG strategies. The

lack of disclosure requirements and a common

O F F I C E O F T H E I N V E S T O R A D V O C AT E

disclosure framework tailored to ESG investing

make it harder for investors who seek to understand

which investments or investment policies are

associated with a particular ESG strategy. In the

absence of informative disclosures, a fund’s or

adviser’s disclosure could exaggerate its actual

consideration of ESG factors. Our Office has indicated

our concern regarding this activity (commonly known

as “greenwashing”) in previous reports.69

The proposed rule and form amendments are

designed to provide consistent standards for ESG

disclosures, allowing investors to make better

informed decisions as they compare various

ESG investments. The proposal’s framework for

ESG-related strategy disclosure is designed to enable

investors to determine whether a fund’s or adviser’s

ESG marketing statements translate into concrete and

specific measures taken to address ESG goals and

portfolio allocation. The proposal also requires certain

environmentally focused funds to disclose information

regarding the greenhouse gas (GHG) emissions

associated with their portfolio.

The proposal identifies three categories of ESG funds,

and sets forth requirements tailored to each category:

§ Integration Funds. Funds that integrate ESG factors

alongside non-ESG factors in investment decisions

would be required to describe how ESG factors are

incorporated into their investment process.

§ ESG-Focused Funds. Funds for which ESG factors

are a significant or main consideration would be

required to provide detailed disclosure, including a

standardized ESG strategy overview table.

§ Impact Funds. A subset of ESG-Focused Funds

that seek to achieve a particular ESG impact would

be required to disclose how it measures progress on

its objective.

Integration Funds would be required to make

generally similar disclosures in their brochures

with respect to their consideration of ESG factors

in the significant investment strategies or methods

of analysis they pursue and report certain ESG

information in their annual filings with the

Commission.

We look forward to reviewing the comments on

this significant rulemaking and to continuing

our engagement with Division of Investment

Management staff as we help ensure that the

interests of investors are well-represented

throughout the rulemaking process.

FUND NAMES

Certain ESG-Focused Funds would be required

to provide additional information about their

strategies, including information about the

impacts they seek to achieve and key metrics to

assess their progress. The proposal would require

funds that use proxy voting or engagement with

issuers as a significant means of implementing their

ESG strategy to provide additional information

about their proxy voting or ESG engagements,

as applicable.

On May 25, 2022, the Commission proposed

amendments to enhance and modernize the

Investment Company Act “Names Rule” to address

changes in the fund industry and compliance

practices that have developed in the approximately

20 years since the rule was adopted.70 In Fiscal

Year 2023, we will work with Commission staff

to assess public comments on the proposal and

provide input with an investor-protection focus as

any changes are finalized.

The proposal generally would require ESG-Focused

Funds that consider environmental factors in

their investment strategies to disclose additional

information regarding the GHG emissions

associated with their investments. These funds

would be required to disclose the carbon footprint

and the weighted average carbon intensity of their

portfolio. The requirements are designed to meet

demand from investors seeking environmentally

focused fund investments for consistent and

comparable quantitative information regarding the

GHG emissions associated with their portfolios and

to allow investors to make decisions in line with

their own ESG goals and expectations. Funds that

disclose that they do not consider GHG emissions

as part of their ESG strategy would not be required

to report this information. Integration Funds that

consider GHG emissions would be required to

disclose additional information about how the

fund considers GHG emissions, including the

methodology and data sources the fund may use as

part of its consideration of GHG emissions.

Broadly, the proposal recommends the following

amendments:

§ Modernization of the 80 percent Investment

Policy Requirement. The Names Rule currently

requires funds with certain names to adopt a

policy to invest 80 percent of their assets in

the investments suggested by that name. The

proposal would expand this requirement to

apply to any fund name with terms suggesting

that the fund focuses in investments that

have, or investments whose issuers have,

particular characteristics. This would include,

for example, fund names with terms such as

“growth” or “value” and those indicating that

the fund’s investment decisions incorporate one

or more ESG factors. Further, to address the

rule’s application to derivatives investments,

the proposal would require a fund to use a

derivatives instrument’s notional amount,

rather than its market value, for the purpose of

determining the fund’s compliance with its 80

percent investment policy.71

REPORT ON OBJECTIVES: FISCAL YEAR 2023

§ Temporary Departures from a Fund’s 80 percent

Investment Policy. The proposal would specify

the particular circumstances under which a

fund may depart from its 80 percent investment

policy, such as sudden changes in market value

of underlying investments, including specific

time frames for returning to 80 percent.72

§ Unlisted Closed-End Funds and Business

Development Companies (BDCs). The proposal

would prohibit a registered closed-end fund or

BDC whose shares are not listed on a national

securities exchange from changing its 80

percent investment policy without a shareholder

vote. This prohibition would ensure these

investors could vote on a change in investment

policy given their limited options to exit their

investments if the change were made.73

§ Enhanced Prospectus Disclosure, Reporting,

and Recordkeeping. The proposal would

include a number of amendments to provide

enhanced information to investors and the

Commission about how fund names track

their investments. The proposal would require

fund prospectus disclosure that defines the

terms used in a fund’s name. The proposal also

includes amendments to Form N-PORT to

require greater transparency on how the fund’s

investments match the fund’s investment focus.

The proposal would, furthermore, require funds

to keep certain records regarding how they

comply with the rule or why they think they are

not subject to it.74

§ Materially Deceptive and Misleading Use of

ESG Terminology. Under the proposal, a fund

that considers ESG factors alongside but not

more centrally than other, non-ESG factors

in its investment decisions would not be

O F F I C E O F T H E I N V E S T O R A D V O C AT E

permitted to use ESG or similar terminology

in its name. Doing so would be defined to be

materially deceptive or misleading. For such

“ESG Integration Funds,” the ESG factors

are generally no more significant than other

factors in the investment selection process, such

that ESG factors may not be determinative in

deciding to include or exclude any particular

investment in the portfolio.75

§ Modernization of Notice Requirement. The

proposal would retain the current rule’s

requirement that, unless the 80 percent

investment policy is a fundamental policy of

the fund, notice must be provided to fund

shareholders of any change in the fund’s

80 percent investment policy. The proposal

would update the rule’s notice requirement

to expressly address funds that use electronic

delivery methods to provide information to their

shareholders.76

We look forward to working with our Commission

colleagues as this rulemaking initiative progresses.

Our Office is always focused on disclosure to

investors because it is found at the core of many

investor-protection efforts, and a fund’s name

may constitute the single most significant piece of

disclosure considered by many investors.

OPEN AND MACHINE-READABLE DATA

Currently, the majority of filings to the SEC’s

EDGAR system are submitted in HTML or ASCII,

both of which are unstructured data languages.

Information disclosed in these filings is difficult

for investors and markets to access, compile,

and analyze as compared to information that is

submitted in a machine-readable data language.

However, in several recent rulemaking proposals,

the Commission has sought to require that filings

be made using a machine-readable data language.77

For instance, in a 2021 proposal to amend rules

regarding disclosure about repurchases of an

issuer’s equity securities, often referred to as

“buybacks,” the Commission proposed requiring

Inline XBRL tagging of the repurchase disclosures,

which would make the disclosures more readily

available and easily accessible to investors,

market participants, and others for aggregation,

comparison, filtering, and other analysis.78

The Commission’s structured disclosure initiatives

are consistent with a statutory directive known as

the Foundations of Evidence-Based Policymaking

Act of 2018 (the “Evidence Act”).79 Among other

things, the Evidence Act requires federal agencies80

to put more data assets of the federal government

into the public domain and make them available in

open, machine-readable formats.81

The Evidence Act builds on a series of earlier

laws and policies designed to promote the federal

government’s transparency and accountability to

the public at large. For instance, the Freedom of

Information Act provides general-public access,

with limited exemptions, to documents pertaining

to federal agency activities.82 United States

Department of Justice (DOJ) guidelines from 2009

encourage agencies implementing the Freedom of

Information Act to make discretionary disclosures

of information and to readily and systematically

post information online in advance of any

public request.83 The Evidence Act codifies the

presumption of openness of the DOJ guidelines: if a

data asset that is maintained by an agency is subject

to disclosure under the Freedom of Information

Act, then the Act directs the agency to put the data

asset in the public domain as a matter of course, or

by default rule, unless the agency has a valid basis

for not doing so.84

Similarly, the Evidence Act extends a provision of

another law governing federal agencies engaged in

the collection and dissemination of information.

The Paperwork Reduction Act directs federal

agencies to consider making the information

available in a manner that maximizes, to the

extent feasible, the utility of the information to

agencies and to the public from an information

processing standpoint.85 Various policies further

encourage agencies to collect or create information

in a way that supports downstream information

processing and dissemination, including specifically

by utilizing data standards in order to maximize

interoperability and machine-readability.86

Simply put, data standards are common ways

of expressing information, and the Evidence Act

requires agencies to utilize data standards going

forward.

Systematic implementation of the Evidence Act

will involve intra-agency work streams as well as

inter-agency coordination. The statute requires

agencies to inventory their data assets87 and make

them available in an open format.88 Agencies

must make determinations regarding whether or

not data assets that they maintain have been, or

may be, released to the public, including under

the Freedom of Information Act. For those data

assets that are subject to disclosure under the

Freedom of Information Act, agencies must make

determinations regarding whether or not to release

them to the public, taking into account existing

law and other applicable restrictions.89 For those

data assets that agencies determine to release to

the public, the agencies must release them in open,

machine-readable formats.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Unfortunately, implementation of the Evidence

Act carries lopsided risks for agencies. Careful

procedures must be in place for agency

determinations regarding whether or not data

assets are public data assets, as the consequences

of releasing certain types of information required

to be kept non-public, such as personal data

and trade secrets, are not just irreversible but

potentially illegal. On the other hand, there

is no statutory penalty for failing to meet the

Evidence Act’s requirements. The sheer scope of

the overall directive and the lack of accompanying

appropriated funds create implementation

challenges, and the statute by its terms gives

agencies flexibility in determining which data assets

to prioritize.90 These circumstances might incline

some agencies to wait for statutorily required

implementation guidance to be issued by the Office

of Management and Budget before taking any

action at all.91

Our Office has long advocated the use of machinereadable data languages for disclosure filings

because we believe that fundamental investment

O F F I C E O F T H E I N V E S T O R A D V O C AT E

analysis will be made more economically feasible

as investors and third party data providers are

able to obtain access to machine-readable data.92

Accordingly, we support the Commission’s recent

steps to require the filing of disclosures in a

structured format. While these initiatives may seem

technical and prosaic, they are vitally important

for serving the investing public in our increasingly

digital world—akin to earlier initiatives to move

from paper to electronic filings.

The Commission has considerable experience

with providing voluminous information to the

public and, in our view, may be in a position to

lead the federal government in implementation

of the Evidence Act. The pay-off for investors

is potentially enormous: more of the federal

government’s vast trove of information made

publicly available for the first time and made

available in a way that facilitates maximal

information processing capabilities. We will

monitor developments in this area and continue

making the legal and policy case for each of the

Commission’s structured disclosure initiatives.

OMBUDSMAN’S REPORT

s set forth in Exchange Act Section

4(g)(8), 15 U.S.C. § 78d(g)(8), the

Ombudsman is required to: (i) act

as a liaison between the Commission and any

retail investor in resolving problems that retail

investors may have with the Commission or

with self-regulatory organizations; (ii) review

and make recommendations regarding policies

and procedures to encourage persons to present

questions to the Investor Advocate regarding

compliance with the securities laws; and (iii)

establish safeguards to maintain the confidentiality

of communications between investors and the

Ombudsman.93

Accordingly, this Ombudsman’s Report provides

a look back on the Ombudsman’s activities for

the six-month period of October 1, 2021 through

March 31, 2022 (Reporting Period), and discusses

the Ombudsman’s objectives and outlook for

Fiscal Year 2023, beginning October 1, 2022.

The Ombudsman is also required to “submit

a semi-annual report to the Investor Advocate

that describes the activities and evaluates the

effectiveness of the Ombudsman during the

preceding year” (Ombudsman’s Report).94 The

Ombudsman’s Report must be included in the

semi-annual reports submitted by the Investor

Advocate to Congress. To maintain reporting

continuity, the Ombudsman’s Report included

in the Investor Advocate’s June 30 Report on

Objectives describes the Ombudsman’s activities

during the first six months of the current fiscal year

and provides the Ombudsman’s objectives for the

following full fiscal year. The Ombudsman’s Report

included in the Investor Advocate’s December 31

Report on Activities describes the activities and

discusses the effectiveness of the Ombudsman95

during the full preceding fiscal year.

§ listening to inquiries, concerns, complaints, and

related issues;

§ helping persons explore available SEC options

and resources;

§ clarifying certain SEC decisions, policies,

and practices;

§ taking objective measures to informally resolve

matters that fall outside of the established

resolution channels and procedures at the

SEC; and

§ providing periodic updates to SEC leadership so

that they are aware of trends and significant

emerging issues that are brought to our

attention, and otherwise acting as an alternate

channel of communication between retail

investors and the SEC.

OMBUDSMAN ROLE AND

STANDARDS OF PRACTICE

The Ombudsman assists retail investors and other

persons with concerns or complaints about the

SEC or the SROs the SEC oversees. The assistance

the Ombudsman provides includes, but is not

limited to:

REPORT ON OBJECTIVES: FISCAL YEAR 2023

In practice, individuals often seek the Ombudsman’s

assistance as an initial point of contact to resolve

their inquiries or as a subsequent or ongoing point

of contact when they are dissatisfied with the

outcome, rate of progress, or resolution of their

inquiries.

The broad role and function of the Ombudsman is

somewhat similar to the broad roles and functions

of ombudsmen at the other federal financial

regulatory agencies.

Ombudsmen at the Federal Financial Regulatory Agencies

CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

CFPBOmbudsman@cfpb.gov | (855) 830-7880

www.consumerfinance.gov/cfpb-ombudsman/

The CFPB Ombudsman’s Office is an independent, impartial, and confidential

resource that assists consumers, financial entities, consumer or trade groups, and

others in informally resolving process issues arising from CFPB activities. Contact

us on individual or systemic issues if existing CFPB processes did not address

your concerns, or to keep your concerns confidential. We may assist, for example,

by: facilitating discussions, brainstorming options, and providing feedback and

recommendations to the CFPB.

FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC)

ombudsman@fdic.gov | (877) 275-3342

www.fdic.gov/regulations/resources/ombudsman/index.html

The FDIC Office of the Ombudsman is a confidential, neutral, and independent

source of information and assistance to anyone affected by the FDIC in its

regulatory, resolution, receivership, or asset disposition activities. If you have a

problem or complaint with the FDIC that is not involved in litigation, arbitration,

or mediation, you may contact the Office of the Ombudsman for confidential

assistance. Our office will work with other FDIC divisions and offices as a liaison to

address your issue.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

FEDERAL RESERVE BOARD (FRB)

ombudsman@frb.gov | (800) 337-0429

www.federalreserve.gov/aboutthefed/ombudsman.htm

The Ombudsman’s office facilitates the fair and timely resolution of complaints related

to the Federal Reserve System’s regulatory activities. The Ombudsman serves as an

independent, confidential resource for individuals and institutions that are affected by

the Federal Reserve System’s regulatory and supervisory actions.

OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC)

OCCOmbudsman@occ.treas.gov | (202) 649-5530

www.occ.gov/about/who-we-are/organizations/office-of-enterprise-governance-andthe-ombudsman/index-office-of-enterprise-governance-and-the-ombudsman.html

The OCC Ombudsman, who reports directly to the Comptroller of the Currency and

operates outside of bank supervision, ensures that bankers have access to the appeals

process and that appeals are reviewed fairly according to existing standards. The OCC

appeals process for national banks and federal savings associations (collectively, banks)

provides an independent, fair, and binding means of resolving disputes arising during the

supervisory process; helps ensure the most sound supervision decisions possible; and

promotes open, continuous communication between banks and the OCC.

NATIONAL CREDIT UNION ADMINISTRATION (NCUA)

ombudsman@ncua.gov | (703) 518-1175

www.ncua.gov/about/open-government/ombudsman

NCUA’s Ombudsman reviews consumer complaints and recommends possible solutions.

The issues generally result from process concerns. As a consumer, you may choose to

bring your concern to the Ombudsman after attempting to obtain resolution from the

NCUA Consumer Assistance Center.

U.S. SECURITIES AND EXCHANGE COMMISSION (SEC)

ombudsman@sec.gov | (877) 732-2001

www.sec.gov/ombudsman

The SEC Ombudsman is a confidential, impartial, and independent resource who

serves as a liaison to help retail investors—sometimes referred to as individual investors

or Main Street investors—resolve problems they may have with the SEC or with the

self-regulatory organizations the SEC oversees. The SEC Ombudsman also reviews

and recommends policies and procedures to encourage persons to present questions

and feedback about the securities laws, and establishes safeguards to maintain the

confidentiality of communications between individuals and the SEC Ombudsman.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Similar to ombudsmen at the other federal financial

regulatory agencies, the Ombudsman follows three

core standards of practice:

Confidentiality

Impartiality

Independence

The Ombudsman has

established safeguards

to protect confidentiality,

including the use of OMMS,

a separate email address,

dedicated telephone and fax

lines, and secure file storage.

The Ombudsman generally

treats matters as confidential,

and takes reasonable steps to

maintain the confidentiality

of communications. The

Ombudsman also attempts to

address matters without sharing

information outside of the

Ombudsman staff, unless given

permission to do so. However,

the Ombudsman may need to

contact other SEC divisions

or offices, SROs, entities,

and/or individuals and share

information without permission

under certain circumstances

including, but not limited

to: a threat of imminent risk

or serious harm; assertions,

complaints, or information

relating to violations of the

securities laws; allegations of

government fraud, waste, or

abuse; or if otherwise required

by law.

The Ombudsman does not

represent or act as an advocate

for any individual or entity,

and does not take sides on

any issues. The Ombudsman

maintains a neutral position,

considers the interests and

concerns of all involved parties,

and works to resolve questions

and complaints by clarifying

issues and procedures,

facilitating discussions, and

identifying options and

resources.

By statute, the Ombudsman

reports directly to the Investor

Advocate, who reports directly

to the Chairman of the SEC.

However, the Office of the

Investor Advocate and the

Ombudsman are designed to

remain somewhat independent

from the rest of the SEC.

Through the Congressional

reports filed every six months

by the Investor Advocate,

the Ombudsman reports

directly to Congress without

any prior review or comment

by the Commission or other

Commission staff.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

The Ombudsman’s Challenge

The mission statement of the SEC is to “protect

investors, maintain fair, orderly, and efficient

markets, and facilitate capital formation.”96 A

primary question we encounter, then, is what can

the Ombudsman do for investors who have been

harmed by violations of the federal securities laws?

In appropriate circumstances, the Ombudsman

may be able to present options to investors or

foster communications between the investor and

SEC or SRO staff. However, the Ombudsman is

not authorized to do certain things that investors

request, including:

§ deciding the facts in a dispute that the investor

has with the Commission or an SRO, or in a

dispute before an SRO, such as an arbitration or

mediation;

§ intervening on behalf of, or representing the

interest of, an investor in a formal dispute or

investigation process;

§ providing advice on how the federal securities

laws may impact their particular investments or

legal options; or

§ changing formal outcomes, including decisions

about whether to investigate an allegation of

wrongdoing, settle an enforcement action, or

create a Fair Fund.

With such limitations in mind, when investors

contact the Ombudsman with these and similar

requests, the Ombudsman staff routinely explains

to investors that they have the ability to pursue

other options, protect their interests, and preserve

their legal rights in ways that the Ombudsman

cannot. When appropriate, Ombudsman staff

may inform investors about other SEC resources

available to help address their question or concern,

or may direct investors to external avenues of

assistance. For example, when an investor contacts

the Ombudsman with concerns that fall under the

purview of another federal financial regulatory

agency, the Ombudsman may, after obtaining

consent from the investor, facilitate communication

between the investor and the ombudsman from the

appropriate federal financial regulatory agency in

an effort to address the matter.

In addition to responding to investor complaints,

requests and concerns on an ad hoc basis,

Ombudsman staff also stays current on policy

issues that affect retail investors by engaging

with investor advocacy groups such as the North

American Securities Administrators Association

(NASAA), the Public Investors Arbitration Bar

Association (PIABA), and law school securities

arbitration clinics, which provide legal services to

harmed investors. Through our engagement, we

gain a deeper understanding of potential legal and

structural difficulties retail investors may face as

they interact with industry professionals and with

SROs. This understanding may prompt broader

Ombudsman action and advocacy on behalf of

retail investors, such as research into a particular

area of investor concern.

STREAMLINED COMMUNICATIONS

WITH RETAIL INVESTORS

The Ombudsman Matter Management System

(OMMS) is an electronic platform for receiving

inquiries, as well as tracking and analyzing matter

and contact information, while ensuring all

necessary data management, confidentiality, and

reporting requirements are met. The OMMS Form,

a web-based, mobile-friendly form permitting the

submission of inquiries, complaints, and documents

directly to the Ombudsman, guides the submitter

through a series of questions specifically tailored

to elicit information concerning matters within the

scope of the Ombudsman’s function. In addition,

the OMMS Form allows submitters to easily

upload and submit related documents for staff

REPORT ON OBJECTIVES: FISCAL YEAR 2023

review. When an OMMS matter record is created,

the Ombudsman can review the matter details and

communicate with the investor via the OMMS

platform. OMMS also allows the Ombudsman

and staff to search and analyze matters and

contacts by submitter, primary issue, fiscal year,

and a number of other categories, and to review

data and customize specific reports when a deeper

examination is required.

While the Ombudsman encourages persons to submit

their inquiries via the OMMS Form, for any persons

who do not wish, or are unable, to use the OMMS

Form, they may still contact the Ombudsman by

email, telephone, fax, and mail.

The following graphic illustrates the general lifecycle

of what happens when investors or other interested

persons contact the Ombudsman for assistance:

What Happens When You Contact the Ombudsman

START

END

We update

your matter record

accordingly. This

provides the Ombudsman

with easy access to your

matter information

should you have

additional questions

or concerns.

We review

your information,

determine if you are a

retail investor and if your

matter concerns the SEC

or a related SRO, and

confirm that your

matter is entered

in OMMS.

We review

your matter in detail,

including any related

background information,

laws, and policies.

The Ombudsman

resolves your matter

or provides options for

you to consider. You may

be informed that your

matter was referred

to another SEC division

or office for further

assistance or

resolution.

The Ombudsman

may contact you,

SEC staff, and other key

persons for more details

on the matter. The

Ombudsman will discuss

your concerns about

confidentiality, if any,

at this point.

The Ombudsman

and staff may contact

you to gather more

information and to

reply to any interim

correspondence. This

may occur several times

as we work to resolve

your matter.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

The Ombudsman

and staff discuss

your matter internally

to determine the best

options for resolution

and to identify other

resources that may

be helpful to you.

SERVICE BY THE NUMBERS

To respond to inquiries effectively and efficiently,

the Ombudsman monitors the volume of inquiries

and the staff resources devoted to addressing

the particular concerns raised. The Ombudsman

tracks all inquiries received by, or referred to, the

Ombudsman, as well as all related correspondence

and communications to and from Ombudsman

staff. We track the status of the inquiry from its

receipt to its resolution or referral, and we monitor

the staff engagement and resources utilized to

respond to the inquiry. This helps the Ombudsman

identify systemic or problematic issues, analyze

matter volume and trends, and provide data-driven

support for recommendations presented by the

Ombudsman to the Investor Advocate for review

and consideration.

Inquiry volume is counted in terms of matters

and contacts. A matter is created when an initial

contact—a new, discrete inquiry—is received by

or referred to the Ombudsman. When a matter

is created, the Ombudsman reviews the facts,

circumstances, and concerns, and assesses the staff

engagement and resources that may be required to

respond to, refer, or resolve the matter.

Once a matter is created, it may generate

subsequent contacts—related inquiries and

communications to or from the Ombudsman staff

deriving from the matter. These contacts often

require further attention to answer additional

investor questions, explain or clarify proposed

resolution options, discuss issues with appropriate

SEC or SRO staff, or respond to challenging or

persistent communications from an investor. This

system of counting matters and contacts helps the

Ombudsman quickly assess volume and resource

issues related to each matter.

Data Across Primary Issue Categories

The Primary Issue Categories used below are

broad descriptive labels that reflect the submitter’s

description or characterization of their complaint,

based upon the information the submitter

provided.97 During the six-month Reporting Period,

retail investors, industry professionals, concerned

citizens, and other interested persons contacted

the Ombudsman for assistance on 1,374 matters

covering 10 primary issue categories:

Matters by Primary Issue Category

October 1, 2021 – March 31, 2022

0.8%

0.9%

0.5%

0.3%

8.4%

12.4%

29.6%

12.5%

13.6%

20.9%

Investment Products / Retirement Accounts (407)

SEC Questions / Complaints (287)

Allegations of Securities Law Violations / Fraud (187)

SEC Investigations / Litigation / Enforcement Actions (172)

Non-SEC / Other Matters (171)

Atypical Matters (115)

Securities Laws / Rules / Regulations / Procedures (13)

FINRA Complaints / Questions / Procedures (11)

Company Disclosures and Information (7)

Securities Ownership (4)

REPORT ON OBJECTIVES: FISCAL YEAR 2023

In addition to the 1,374 matters received, we

fielded 1,763 contacts covering 10 primary issue

categories during the Reporting Period, for a total

of 3,137 contacts. The chart that follows displays

the distribution of the 3,137 total contacts by

primary issue category:

Contacts by Primary Issue Category

October 1, 2021 – March 31, 2022

0.7%

1.0%

0.5%

0.3%

7.5%

12.7%

28.5%

13.6%

14.8%

20.3%

Investment Products / Retirement Accounts (895)

SEC Questions / Complaints (638)

Allegations of Securities Law Violations / Fraud (463)

SEC Investigations / Litigation / Enforcement Actions (428)

Non-SEC / Other Matters (399)

Atypical Matters (235)

Securities Laws / Rules / Regulations / Procedures (32)

FINRA Complaints / Questions / Procedures (23)

Company Disclosures and Information (15)

Securities Ownership (9)

O F F I C E O F T H E I N V E S T O R A D V O C AT E

How the Numbers Inform Our Efforts

The Ombudsman tracks matter and contact data to

maintain a comprehensive view of the allocation of

staff resources and to identify matters and contacts

that significantly alter workflow volumes, call for

the realignment of Ombudsman staff assignments,

or require added staff support. The data also

informs staff resource allocation considerations

related to proposed program development, training,

and outreach efforts. By tracking matters and

contacts across primary issue categories, the data

also helps the Ombudsman identify potential areas

of concern or interest and enables the Ombudsman

to act as an early warning system, as necessary,

on the potential impact of particular issues and

concerns raised by retail investors and others.

While the matter and contact numbers capture the

volume and categories of inquiries the Ombudsman

receives, the numbers do not capture the full value

of the services the Ombudsman provides to the

investing public. Assisting just one investor with

one issue can make a significant difference to that

investor, and at times, may inform our approach as

we examine policies, regulations, and rulemakings.

AREAS OF INTEREST AND

IMPORTANCE TO RETAIL INVESTORS

As noted above, the Ombudsman received

just under 1,400 matter submissions by retail

investors during the first half of FY 2022. The

vignettes that follow are simplified composite

descriptions of recurring inquiries and complaints,

with details generalized, modified, or removed to

avoid the disclosure of nonpublic or confidential

information. These vignettes are included to help

the reader better understand the context of the

investor experience when an investor contacts the

Ombudsman and to provide the reader with a

better sense of the variety of submissions we receive

from retail investors.

Crypto Exchanges98

The Ombudsman received numerous retail investor complaints about investments made through crypto

exchanges. Some investors reported that their accounts had been hacked or frozen, and that they were

unable to reach customer service for assistance. Other investors reported they had invested through crypto

exchanges that appeared to be legitimate, only to learn when they tried to take out their alleged earnings

that they had been defrauded. These investors were typically contacted through social media by individuals purporting to be brokers, or sometimes by individuals on dating sites as part of a “romance scam.”99

Ombudsman staff submitted complaints on behalf of many of these investors through the SEC’s Tips,

Complaints and Referrals (TCR) system,100 and provided them with information and resources from the SEC’s

Investor.gov website.

Dark Pools/Naked Short Selling

Many retail investors who contacted the Ombudsman expressed their frustration with the continuing market

volatility in shares of certain stocks. A consistent complaint among these investors related to hedge fund

short selling of certain stocks through alternative trading systems known as “dark pools” that allow users to

place orders without publicly displaying the size and price of their orders to other participants.101 These investors frequently alleged that hedge funds manipulated the price of certain stocks through illegal dark pool

short sales, causing retail investors to suffer losses. Among other things, the Ombudsman informed these

investors of the SEC’s proposal to amend Rule 13f-2 and corresponding Form SHO, which would require

certain institutional investors to report short sale information to the SEC on a monthly basis, and make information about large short sale positions for each individual security publicly available. Ombudsman staff also

encouraged these investors to submit comments on the proposed rules.102

ESG Disclosure

On March 21, 2022, the SEC released its Proposed Rules to Enhance and Standardize Climate-Related Disclosures for Investors.103 Since that time, the Ombudsman has received a broad range of submissions from

numerous investors regarding these proposed rules. A number of investors argued that the SEC lacked

authority to require any type of environmental impact disclosure, and/or accused the SEC of regulatory

overreach. Others asked for more information about the costs and benefits to individual investors if such

disclosures were ultimately required. Several others expressed support of the proposed rules, although some

suggested that the proposed rules did not go far enough, or raised concerns that reporting loopholes would

allow companies to obscure the information they were required to report. The Ombudsman thanked these

investors for sharing their views and provided guidance regarding how to submit comments regarding the

proposed rule.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

FINRA Arbitration

The Ombudsman received several complaints regarding the nature and processes of FINRA arbitration.

One investor, unaware that FINRA arbitration is a private system of dispute resolution, took issue with the

fact that the hearing and any briefings or filings would not be available to the public. Another investor

complained that a lack of information about the rules governing FINRA arbitration resulted in his failure to

amend the statement of claim in a timely manner, and ultimately in a ruling in the respondent’s favor. The

investor contacted the Ombudsman to determine what his options were after the arbitrator’s ruling. In replying to these investors, the Ombudsman provided them with information about FINRA arbitration generally,

including the fact that the SEC cannot amend or overturn an arbitrator’s decision, and that FINRA does not

allow for the appeal of an arbitration award.104 These types of complaints and issues relating to the retail

investor experience in the FINRA arbitration forum are part of the Ombudsman’s study of FINRA arbitration,

further described below.

Fair Fund Distributions

Ombudsman staff helped many investors navigate the process for submitting reimbursement claims through

SEC Fair Funds. Although most of these investors were aware that the SEC had initiated an action against

certain individuals or companies for allegedly violating the securities laws, many had no idea if or how they

could recover their personal losses. Ombudsman staff reviewed the enforcement actions in question to

determine whether a distribution process had been established by the court through a Fair Fund and, if so,

directed the investors to status reports on distribution proceedings in each case.105 In one instance, Ombudsman staff assisted an investor whose distribution claim would have otherwise been rejected by connecting

him with appropriate SEC staff.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

ACTING IN THE INTERESTS OF

RETAIL INVESTORS

As discussed above, Ombudsman staff field retail

investor complaints, monitor SRO rulemakings and

activities, and engage with external stakeholders

regarding issues of importance to retail investors.

When possible, we look for ways to improve SEC

and SRO processes, rules and regulations for

the collective benefit of retail investors, and we

advocate for those types of reforms.

In FY 2023, Ombudsman staff will continue

to focus efforts on studying the incidence and

potential effects of discovery abuse in the FINRA

Dispute Resolution forum, and will explore

the use of mandatory pre-dispute arbitration

clauses in investment adviser account agreements.

Ombudsman staff will additionally track matters

that affect senior investors, such as SRO rules that

provide additional protections for seniors.

Discovery Abuse in FINRA Arbitration

As noted above, parties to a FINRA arbitration

sometimes seek the assistance of the Ombudsman

to alter or overturn an arbitration award.

Unfortunately, many people are unaware that the

SEC lacks authority to modify a FINRA arbitration

award. Similarly, FINRA has no part in deciding

or altering an award, and there is no avenue for

appeal of an arbitration award through FINRA.106

An arbitrator’s decision is therefore final and

binding, and is subject to review only in federal or

state court.107 A court may only modify or vacate

an arbitral award in specific, rare instances.108

Arbitrators’ decisions are final throughout the

arbitration process—including discovery, the

process by which parties exchange documents and

information about their case. In situations where

the parties disagree about whether to exchange

certain documents or information, arbitrators

can order a party to produce the documents or

information at issue, or sanction a party for its

failure to do so. Because arbitrators may therefore

act as gatekeepers for the flow of information

between parties, it is critical that arbitrators

ensure the parties “cooperate to the fullest extent

practicable in the exchange of documents and

information to expedite the arbitration.”109 A

party’s lack of access to discovery will likely impede

that party’s ability to present its case. Viewed

more broadly, as FINRA recently noted, “[f]ailure

to comply with the discovery rules hinders the

efficient and cost-effective resolution of disputes

and undermines the integrity and fairness of

FINRA’s forum.”110

Given the significance of the discovery process to

the fairness of the FINRA arbitration forum, in

FY 2023, Ombudsman staff will continue its study

of discovery in FINRA arbitration in an effort to

collect empirical data on this issue. Among other

things, the study will seek to identify correlations,

if any, between the parties’ failure to comply with

FINRA’s discovery rules and the cost, duration, and

outcome of FINRA arbitrations.

Mandatory Pre-Dispute Arbitration Clauses

in Investment Advisory Agreements

As members of FINRA, broker-dealers can avail

themselves of the FINRA Dispute Resolution

forum, and virtually all brokerage account

agreements include clauses stipulating that any

customer dispute arising in connection with the

business activities of the broker will be arbitrated

in FINRA’s Dispute Resolution forum.111 However,

investment advisers that are registered with the

SEC or state governments (RIAs) are not members

REPORT ON OBJECTIVES: FISCAL YEAR 2023

of FINRA, and there is currently no comparable,

dedicated forum for adjudicating disputes between

RIAs and their clients. Nonetheless, many RIAs

have begun including mandatory pre-dispute

arbitration provisions in investment advisory

agreements that require clients to resolve future

disputes in a designated arbitral forum of the

RIA’s choosing.112 The merits of including these

arbitration clauses in RIA account agreements have

been increasingly debated among industry analysts

and interested groups. Given the importance of

the issue for retail investors, the Office of the

Ombudsman has been monitoring this issue and is

preparing to undertake an inquiry into the subject.

Support for mandatory arbitration is rooted

in the notion that arbitration is more efficient

than litigation both in terms of time and money.

Arbitration proceedings are generally not bound by

the same rules of discovery and procedure as the

courts, with fewer formal appearances and more

relaxed standards for the admission of evidence.113

As a result, arbitrations can purportedly be

commenced and resolved more quickly than

traditional court proceedings.114 Supporters also

assert that arbitrators versed in securities matters

are more adept than juries in understanding these

matters and in applying the law, thereby further

expediting the arbitration process.115

However, critics of mandatory arbitration clauses

in investment advisory agreements have raised

several distinct concerns. First, allowing the

RIA to select the arbitral forum might create an

interdependent system wherein RIAs select the

arbitral forum most likely to treat them favorably,

and the arbitral forum has financial incentive to

be selected by the RIA.116 Second, commenters

O F F I C E O F T H E I N V E S T O R A D V O C AT E

have argued that the fees assessed by arbitral fora

commonly selected by RIAs can be cost-prohibitive

to claimants, rendering the supposed financial

efficiencies of arbitration moot.117 Third, unlike

FINRA arbitration cases, neither the SEC nor any

other regulatory agency has oversight of or insight

into other private arbitrations. Critics assert that

this results in procedures and decisions that are

less likely to favor retail investors.118 Moreover,

while FINRA makes its dispute resolution statistics

publicly available,119 there is no similar mechanism

to track statistics from other private arbitral fora.

Taking into account the varying perspectives

on mandatory arbitration in the RIA context,

Ombudsman staff intends to study the frequency

with which these arbitration clauses are used in

investment advisory agreements, the arbitral fora

selected and other terms included in mandatory

arbitration clauses. This survey will provide a more

complete understanding of RIA arbitration, and

will help identify any problematic issues impacting

retail advisory clients.

FINRA Rule 2165 Expands Protections for

Seniors and Other Investors

The emergence of complex and risky investment

strategies has created new opportunities for

fraudsters to target seniors and others that might be

less familiar with such strategies. Not surprisingly,

as these investment strategies have become

more popular, Ombudsman staff has received

an increased volume of complaints from senior

investors and their caregivers. To better serve the

investors who contact our office for assistance,

Ombudsman staff closely follows policies and rules

that affect senior investors’ interests.

In February 2022, FINRA expanded existing

protections for seniors by broadening the scope of

Rule 2165 – Financial Exploitation of Specified

Adults.120 Rule 2165 allows member firms to place

temporary holds on the accounts of Specified

Adults in relation to specific types of securities

transactions where the firm reasonably believes

the account owner has been, is being, or will be,

exploited.121 The term ‘Specified Adults,’ as defined

by Rule 2165, refers to natural persons age 65 and

older, or natural persons age 18 and older who the

member firm reasonably believes has a mental or

physical impairment that renders the individual

unable to protect his or her own interests.122 The

recently enacted amendments changed Rule 2165

in three primary ways.

§ First, member firms are now permitted to place

a temporary hold on securities transactions

(in addition to disbursements of funds and

securities) where there is a reasonable belief of

financial exploitation of a specified adult, as

defined by the Rule.123

§ Second, the time period for extending a

temporary hold on a disbursement of funds,

securities, or a transaction in securities has

been extended for an additional 30-business

days, where the member firm has reported the

matter to a state regulator, agency or a court

of competent jurisdiction.124 This change

increased the potential maximum duration of

a temporary hold from 25 business days to 55

business days.125

§ Third, member firms are now required to

retain records of the reason for any extension

of a temporary hold, including any related

communications with, or by, a state regulator,

agency or court of competent jurisdiction.126

The amendments went into effect on March 17,

2022.127 In our view, the Rule and its related

amendments should serve as a more flexible tool

to assist brokers in the protection of seniors and

certain other customers where concerns exist that

financial exploitation is or might be occurring.

Ombudsman staff will continue to monitor and

evaluate SRO and SEC rule proposals for potential

benefits and harms to senior investors.

OMBUDSMAN OUTREACH AND

ENGAGEMENT EFFORTS

Law School Clinic Outreach Program

The importance and impact of law school investor

advocacy clinics have increased considerably

since 1997, when then-SEC Chairman Arthur

Levitt, Jr. announced the creation of two pilot

law school investor advocacy clinics to help retail

investors with small claim cases obtain quality legal

representation.128 Today, there are 11 law school

investor advocacy clinics in active operation across

the United States that provide legal counseling

and representation to retail investors involved

in securities industry disputes, comment on rule

proposals, and engage with many more investors

through community-based presentations and

informational materials.129

As discussed in prior Ombudsman’s Reports, our

Law School Clinic Outreach Program (LSCOP) was

launched in 2016 to complement the Ombudsman’s

statutory mandate and core functions.130 One goal

of the LSCOP was, and remains, the exchange

of information and ideas between the law school

investor advocacy clinics and SEC staff. In their

unique roles as counsel to retail investors with

small claims or limited incomes, clinics are uniquely

positioned to examine issues that confront retail

investors from a perspective unavailable to

REPORT ON OBJECTIVES: FISCAL YEAR 2023

SEC staff. The LSCOP allows the Office of the

Investor Advocate to interact directly with the

clinics, engage in meaningful policy discussions,

and gain a better understanding of their views on

suggested regulatory changes and policy initiatives.

Our engagement with the law school clinics also

provides an excellent opportunity to inform law

students interested in securities law and investor

protection issues about internships, externships,

and career opportunities at the SEC. Moreover, our

outreach program aligns with the SEC’s diversity

and inclusion efforts, creates an additional path to

attract a diverse pool of potential applicants, and

demonstrates the SEC’s commitment to a diverse

and inclusive workplace at all levels of the agency.

What began in 2016 as a series of on-site visits

to the law school clinics continued with the

attendance of clinic directors and law students

at public meetings of the Investor Advisory

Committee at SEC headquarters in 2017 and

2018, and subsequently culminated in the first

SEC Investor Advocacy Clinic Summit at SEC

headquarters, hosted by the Investor Advocate

and the Ombudsman in 2019.131 The LSCOP

continues to provide opportunities for meaningful

involvement between the law school clinics and

SEC staff.

2022 SEC Investor Advocacy Clinic Summit

On Thursday, March 31, 2022, the Office of

the Investor Advocate and the SEC Division of

Enforcement’s Retail Strategy Task Force (RSTF)

hosted the third SEC Investor Advocacy Clinic

Summit (Summit) as a virtual event. The 2022

Summit marked the first joint endeavor between

the Office of the Ombudsman and RSTF, as

well as the first time a portion of the program

was broadcast live to the public. The event

O F F I C E O F T H E I N V E S T O R A D V O C AT E

featured remarks from SEC Chair Gary Gensler,

Commissioner Hester Peirce, Commissioner Allison

Herren Lee, and Commissioner Caroline Crenshaw.

All 11 active law school investor advocacy clinics

from across the country shared their perspectives

and engaged with subject matter experts from

the SEC, FINRA and AARP on some of the most

pressing issues currently facing retail investors.132

Summit Overview

The Summit consisted of two programs. The

morning program, an outreach event for senior

investors and their caregivers, was open to the

public and viewable through www.sec.gov. The

afternoon program, open to participating law

schools, SEC staff, and invited guests, consisted of

presentations from clinic students about cryptoasset investments, options and margin trading, and

digital engagement practices, or “gamification,” in

online trading platforms. Over 400 viewers joined

the livestreamed portion of the event, and over 150

viewers and participants joined the rest of the event

through the virtual platform.

Both morning and afternoon programs helped

inform investors, practitioners and regulators

alike of the risks for retail investors in today’s

complex market.

Safeguarding the Golden Years: Avoiding

Financial Fraud

In this inaugural collaboration, RSTF and the

Office of the Ombudsman worked to create

a public outreach event that spoke directly to

the unique challenges senior investors and their

caregivers are currently facing. The outreach

team established and monitored an email Inbox

specifically for the event, where the public could

pose questions and share views on the concerns of

senior investors and their caregivers.

During the program, law students from Fordham

University’s Securities Arbitration and Litigation

Clinic discussed ways that predatory financial

professionals might target senior investors. The

students described a recent case where a senior

couple invested with a firm they deemed to

be trustworthy, in reliance on advertisements

suggesting that the firm served the interests of

seniors. Without authorization and against their

wishes, the couple’s broker invested their funds into

various unsuitable, risky investments.

Law students from the University of Miami’s

Investor Rights Clinic discussed the importance

of establishing a caregiver plan and highlighted

a recent case where the caregiver of a defrauded

senior met obstacles in trying to prevent the fraud

from occurring.

Panelists from the SEC, AARP, and the FINRA

Investor Education Foundation offered their

expert insight into the issues raised by these cases,

provided advice on how seniors and their caregivers

might avoid predatory financial professionals,

and responded to questions from the moderator

and members of the public who had submitted

questions through the designated Summit Inbox.

Clinic Presentations

The afternoon program featured timely

presentations from nine law school clinics about

areas of complexity and concern for retail investors.

Each discussion panel was followed by question

and answer sessions with SEC subject matter

experts in these areas.

In the first panel, “Speculative Investing: Digital

Assets and Meme Stocks,” students from the

University of Pittsburgh School of Law Securities

Arbitration Clinic, Cornell Law School Securities

Law Clinic, and the Seton Hall University School of

Law FINRA Investor Advocacy Project presented

on the risks for retail investors when investing

in digital assets, meme stocks, and non-fungible

tokens (NFTs). The students addressed the

heightened risks of these investments caused by the

spread of misinformation on social media platforms

and by celebrity influencers. The students also

identified hurdles for regulators and best practices

to avoid high-tech securities fraud schemes.

The second panel focused on the “Risks of Options

and Margin Trading.” Students from Howard

University School of Law Investor Justice and

Education Clinic, Cardozo Law School Securities

Arbitration Clinic, and St. John’s University School

of Law Securities Arbitration Clinic described a

client who suffered losses as a result of a broker’s

improper execution of options trades, as well two

clients whose lack of understanding contributed

to significant losses in margin trades. Students

suggested ways to bridge certain regulatory gaps in

options and margin trading for retail investors.

During the third panel, “Gamification and Investor

Behavior,” students from Northwestern Pritzker

School of Law’s Investor Protection Center, New

York Law School’s Securities Arbitration Clinic, and

Pace University Elisabeth Haub School of Law’s

RealFi Investor Rights Clinic identified concerns

about the impact of “gamification” on investor

decision-making. The students’ presentations were

based on their own experiences as novice investors,

as well as the experiences of clinic clients. Noted

concerns included the encouragement of addictive

behaviors, and the influence of gamification

techniques to increase trading activity—like daily

mover lists, analyst ratings, and push notifications.

The students made suggestions to address these

concerns, such as reminders regarding trading app

usage, and the potential application of SEC rules

regarding investment “recommendations.”

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Summit Feedback

Following the Summit, clinic directors and their

students expressed unanimous enthusiasm for the

opportunity to engage and exchange ideas with

the Commission, SEC staff, and each other. Given

the success of the prior SEC Investor Advocacy

Clinic Summits, the Investor Advocate and the

Ombudsman look forward to hosting future

summits—whether as in-person, virtual, or hybrid

events—as a signature feature of the Law School

Clinic Outreach Program.

OBJECTIVES AND OUTLOOK

The Office of the Ombudsman was able to

maintain its peak staff level during the Reporting

Period—the Ombudsman, one senior special

counsel, one senior counsel, one senior law clerk

contractor, and one senior paralegal contractor.

However, in April 2022, Tracey L. McNeil, the

first SEC Ombudsman, departed the agency for

a new opportunity.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

As the Acting Ombudsman, I look forward

to continuing with the external and internal

engagement efforts that the Office of the

Ombudsman has implemented and executed, to

strengthen relationships and increase awareness

of the Ombudsman function. Additionally,

I look forward to the opportunity to work with

the ombudsmen at the other financial federal

regulatory agencies to help investors understand

our roles and the resources we provide. Lastly,

I look forward to the opportunity to review

the Ombudsman Matter Management System

and to continue to give retail investors the

quality of information and service that the Office

of the Ombudsman provides as we liaise with

retail investors.

Latisha R. Brown

Acting Ombudsman

SUMMARY OF

INVESTOR ADVISORY COMMITTEE

RECOMMENDATIONS AND

SEC RESPONSES

ongress established the Investor Advisory

Committee (IAC) to advise and consult

with the Commission on regulatory

priorities, initiatives to protect investor interests,

initiatives to promote investor confidence and the

integrity of the securities marketplace, and other

issues.133 The IAC is composed of the Investor

Advocate, a representative of state securities

commissions, a representative of the interests of

senior citizens, and not fewer than 10 or more

than 20 members appointed by the Commission to

represent the interests of various types of individual

and institutional investors.134

Exchange Act Section 39 authorizes the IAC

to submit findings and recommendations for

review and consideration by the Commission.135

The statute also requires the SEC “promptly” to

issue a public statement assessing each finding or

recommendation of the IAC and disclosing the

action, if any, the Commission intends to take

with respect to the finding or recommendation.136

While the Commission must respond to the IAC’s

recommendations, it is under no obligation to agree

with or act upon the recommendations.137

In each of its reports to Congress, including

this one, the Office of the Investor Advocate

summarizes the IAC recommendations and

the SEC’s responses to them.138 We continue to

report on recommendations until we believe the

Commission’s response is final. For summaries

of Commission activities related to previous

IAC recommendations, please see our earlier

reports to Congress. The Commission may be

pursuing initiatives that are responsive to IAC

recommendations but have not yet been made

public. Commission staff—including the staff

of this Office—are prohibited from disclosing

nonpublic information.139 Therefore, any such

initiatives are not reflected in this Report.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Topic

Date

IAC Recommendation

SEC Response

Protecting Elder

Investors

June 9, 2022

Propose various reforms to

improve the deterrence and

prosecution of investment fraud

against seniors.

Pending.

Funding Investor

Advocacy Clinics

June 9, 2022

Renewing a 2018 IAC

recommendation to provide

grants to law school clinics which

represent investors.

Pending.

Individual Retirement

Accounts (IRAs)140

Dec. 2, 2021

Encourage federal agencies to

address portability and force outs;

have the SEC address the use of

alternative investments in IRAs; and

coordinate with other federal and

state regulators to improve investor

protections over retirement

savings.

Pending.

Special Purpose

Acquisition

Companies (SPACs)141

Sept. 9, 2021

Enhance disclosure requirements

regarding the SPAC sponsor,

potential conflicts of interest,

mechanics of the SPAC and

de-SPAC transactions, the

target search process, and any

additional funding. Publish an

analysis of SPAC participants, their

compensation, and their incentives.

On March 30, 2022, the SEC

proposed adding and amending

rules to enhance investor protection

and disclosure related to SPAC and

de-SPAC transactions.142

Rule 10b5-1 Plans143

Sept. 9, 2021

Require a “cooling off” period and

prohibit overlapping Rule 10b5-1

plans. Require enhanced plan

reporting and disclosures.

On Jan. 13, 2022, the SEC proposed

amendments to Rule 10b5-1 including

enhancements to plan reporting and

disclosure.144

O F F I C E O F T H E I N V E S T O R A D V O C AT E

Topic

Date

IAC Recommendation

SEC Response

Minority and

Underserved

Inclusion145

March 11, 2021

Support regulations, legislation,

programs and other steps that

increase acquisition of financial

assets and services by minority

communities. Through regulatory

oversight of financial services,

enable a more hospitable

environment for minority

investment. Continue and build

upon SEC programs that are

directed toward increasing financial

literacy and supporting minority

investment. Help registered

financial services firms expand and

improve their ability to encourage

investment by under-represented

communities.

Pending.

Credit Rating

Agencies146

March 11, 2021

Identify in Office of Credit Rating

(OCR) reports specific nationally

recognized statistical rating

organizations whose conduct was

deemed to be materially deficient.

Remodel OCR’s annual examination

reports to conform to the approach

utilized in the Public Company

Accounting Oversight Board’s

annual public inspection reports.

Pending.

Accounting and

Financial Disclosure147

May 21, 2020

Reconsider a 2020 rulemaking

proposal that would permit

issuers to omit fourth quarter

results in annual reports and

that would eliminate the tabular

presentation of contractual

obligation information. Closely

monitor issuers’ use of non-GAAP

(Generally Accepted Accounting

Principles) metrics and accounting

developments relating to reverse

factoring.

On June 23, 2020, the SEC’s

Division of Corporation Finance

staff published disclosure guidance

addressing supplier finance programs

in the context of pandemic-related

disruptions.148 On October 21, 2020,

the Financial Accounting Standards

Board (FASB) decided to add a

project to its technical agenda to

address the disclosure of supplier

finance programs involving trade

payables.149 On November 19,

2020, the Commission adopted

the amendments to Regulation

S-K, largely as proposed.150 On

December 20, 2021, FASB proposed

new disclosures of supplier finance

programs.151

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Topic

Date

IAC Recommendation

SEC Response

ESG Disclosure

May 21, 2020

Commence an effort to update

issuer reporting requirements

to include material, decisionuseful disclosure concerning

environmental, social, and

governance matters. Consider

the utility of both principlesbased and prescriptive reporting

requirements.

On February 24, 2021, Acting Chair

Lee directed the SEC’s Division of

Corporation Finance to enhance its

focus on climate-related disclosure

in public company filings.153 On

March 3, 2021, the SEC’s Division

of Examinations announced its

2021 examination priorities, which

included a greater focus on climaterelated risks.154 On March 4, 2021, the

Commission announced the creation

of a Climate and ESG Task Force in its

Division of Enforcement.155 On March

15, 2021, Acting Chair Lee issued

a call for public input on climate

change disclosures.156 On March

21, 2022, the SEC proposed a new

disclosure rule for climate-related

information in public company

filings.157 On March 25, 2022, the SEC

proposed amendments to rules and

reporting forms intended to promote

consistent, comparable, and reliable

information for investors concerning

funds’ and advisers’ incorporation of

ESG factors.158

Disclosure

Effectiveness159

May 21, 2020

Enhance the effectiveness of new

and existing disclosure relied on

primarily by retail investors by,

among other things, adopting

an iterative process that includes

disclosure research, design, and

testing.

On August 5, 2020, the Commission

proposed comprehensive

modifications to the mutual fund and

exchange-traded fund disclosure

framework.160 The Office of the

Investor Advocate is conducting

investor research that may be

relevant to this proposal.

152

O F F I C E O F T H E I N V E S T O R A D V O C AT E

Topic

SEC Guidance and

Rule Proposals on

Proxy Advisors

and Shareholder

Proposals161

Date

IAC Recommendation

SEC Response

Jan. 24, 2020

Revisit priorities in improving the

proxy system, revise and republish

the 2019 proxy voting rulemaking

proposals, and reconsider the 2019

proxy voting guidance.

On July 22, 2020, the Commission

adopted the amendments to the

proxy rules without republishing

them for further comment.162 On

September 23, 2020, the Commission

adopted the amendments to

Exchange Act Rule 14a-8 without

republishing them for further

comment.163

On June 1, 2021, Chair Gensler

directed Commission staff to

consider whether to recommend

further regulatory action regarding

proxy voting advice, in particular

whether to recommend the

Commission revisit its related 2019

and 2020 actions.164 Also on June

1, 2021, the Division of Corporation

Finance issued a statement that it

will not recommend enforcement

action based on the 2019 guidance

or the 2020 amendments while the

Commission is considering further

regulatory action in this area.165

Exchange Rebate Tier

Disclosure166

Jan. 24, 2020

Require the national securities

exchanges to provide the

Commission with regular

disclosures regarding rebate tiers

offered to their members, and

take steps to require monthly

public disclosure of these rebate

practices.

Pending.

Proxy Plumbing167

Sept. 5, 2019

Require end-to-end vote

confirmations to end users of the

proxy system, require all involved

to cooperate in reconciling

vote-related information, conduct

studies on investor views on

anonymity and share lending, and

finalize the 2016 universal proxy

rulemaking proposal.

On April 16, 2021, the Commission

reopened the comment period

on the proposed rules for the

use of universal proxy cards in

all non-exempt solicitations for

contested director elections.168 On

November 17, 2021, the Commission

adopted rule and form amendments

to require the use of a universal

proxy card in all non-exempt

director election contests,

except those involving registered

investment companies and business

development companies.169

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Topic

Date

IAC Recommendation

SEC Response

Structural Changes

to the US Capital

Markets Regarding

Investment Research

in a Post-MiFID II

World170

July 25, 2019

Prioritize certain concepts and

guiding principles, including

the following: (1) consumers of

research, regardless of location,

should be allowed to choose

whether to purchase research

“bundled” or “unbundled” from

trading costs; and (2) there should

be greater transparency regarding

research costs and how those costs

are borne.

On November 12, 2019, the

Commission extended temporary

no-action relief from compliance with

registration under the Advisers Act

for brokers that receive payments for

research in hard dollars or through

research payment accounts from

managers subject to MiFID (Markets

in Financial Instruments Directive) II

through July 3, 2023.171

Human Capital

Management

Disclosure172

Mar. 28, 2019

Revise issuer disclosure

requirements to elicit more

insightful disclosure concerning

how human capital within a firm is

managed and incentivized.

On August 26, 2020, the Commission

adopted rule amendments to

modernize the description of

business, legal proceedings, and

risk factor disclosures that issuers

are required to make pursuant to

Regulation S-K. The amendments

include the addition of human capital

resources as a disclosure topic.173

Transaction Fee Pilot

for NMS Stocks174

Sept. 13, 2018

Adopt a proposed Transaction Fee

Pilot with the following conditions:

(1) include a “no rebate” bucket;

(2) permit companies to opt out

of the pilot; and (3) consider

consolidating Test Groups 1 and 2.

On December 19, 2018, Commission

approved the adoption of new Rule

610T of Regulation NMS to conduct a

Transaction Fee Pilot in NMS stocks.175

On June 16, 2020, following a lawsuit

filed by several exchanges, the

transaction fee pilot was struck down

in the U.S. Circuit Court of Appeals

for the District of Columbia.176

Financial Support

for Law School

Clinics that Support

Investors177

Mar. 8, 2018

Explore ways to improve external

funding sources to the law school

investor advocacy clinics. Work

with FINRA, the North American

Securities Administrators

Association (NASAA), and other

potential partners, and request

legislation from Congress to

consider permanent funding.

Pending.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

Topic

Date

IAC Recommendation

SEC Response

Dual Class and

Other Entrenching

Governance

Structures in Public

Companies178

Mar. 8, 2018

Direct Division of Corporation

Finance staff to scrutinize

disclosure documents filed by

issuers with dual class and other

entrenching governance structures,

comment on such documents so as

to enhance the salience and detail

of risk disclosure, and develop

guidance to address a range of

issues that such structures raise.

Pending.

Mutual Fund Cost

Disclosure179

Apr. 14, 2016

Enhance investors’ understanding

of mutual fund costs and the

impact of those costs on total

accumulations over time. Provide

standardized disclosure of actual

dollar costs on customer account

statements.

On June 5, 2018, the Commission

published a request for comment on

ways to enhance the delivery, design,

and content of fund disclosures,

including shareholder reports and

prospectuses. The request for

comment solicited investor feedback

on fund fees and expenses, and it

included other questions related to

the IAC recommendation (e.g., dollar

vs. percentage disclosure, disclosure

within account statements, etc.).180

On Oct. 30, 2018, the Commission

proposed amendments to help

investors make informed investment

decisions regarding variable annuity

and variable life insurance contracts.181

On March 11, 2020, the Commission

adopted the amendments largely

as proposed.182

Shortening the

Settlement Cycle183

Feb. 12, 2015

Shorten the security settlement

period in the U.S. financial markets

from a three-day settlement cycle

(referred to as T+3) to a one-day

settlement cycle (T+1) for “at

least” transactions in U.S. equities,

On February 9, 2022, the

Commission proposed to shorten

the settlement cycle to T+1 for

equities, corporate bonds, and other

non-exempt securities.184

corporate and municipal bonds,

and unit investment trusts.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

Topic

Date

IAC Recommendation

SEC Response

Accredited Investor

Definition185

Oct. 9, 2014

Evaluate whether the current

definition achieves the goal of

identifying a class of individuals

who are able to make an

informed investment decision and

protect their interests without

the protections of registration

and disclosure. Consider other

definitional approaches.

On August 26, 2020, the Commission

adopted amendments to the

definition of accredited investor.186

Among other changes, the

amendments allow individuals to

qualify as accredited investors if

they possess certain professional

credentials or affiliations, even if they

do not meet the income or net worth

thresholds. The Commission chose

not to modify the definition’s income

or net worth thresholds.

Impartiality in

Oct. 9, 2014

Ensure impartiality in the disclosure

Pending.

the Disclosure of

Preliminary Voting

Results187

Universal Proxy

Ballots188

of preliminary voting results.

July 25, 2013

Allow universal ballots in

connection with short-slate

director nominations.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

On October 26, 2016, the

Commission proposed amendments

to the proxy rules to require parties in

a contested election to use universal

proxy cards that would include

the names of all board of director

nominees.189 On April 16, 2021, the

Commission reopened the comment

period on the proposed rules.190 On

November 17, 2021, the Commission

adopted rule and form amendments

to require the use of a universal

proxy card in all non-exempt

director election contests,

except those involving registered

investment companies and business

development companies.191

ENDNOTES

See Gary Gensler, Chairman, SEC, Prepared Remarks of

Gary Gensler on Crypto Markets at the Penn Law Capital

Markets Association Annual Conference (Apr. 4, 2022),

https://www.sec.gov/news/speech/gensler-remarks-cryptomarkets-040422.

Exchange Act § 4(g)(4)(A), 15 U.S.C. § 78d(g)(4)(A).

Id.

Exchange Act § 4(g)(8)(A), 15 U.S.C. § 78d(g)(8)(A).

Exchange Act § 4(g)(8)(D), 15 U.S.C. § 78d(g)(8)(D).

See Unstable Coins, Glassnode (May 16, 2022), https://

insights.glassnode.com/the-week-onchain-week-20-2022.

Exchange Act § 4(g)(4)(B), 15 U.S.C. § 78d(g)(4)(B).

Exchange Act § 4(g)(4)(C), 15 U.S.C. § 78d(g)(4)(C).

Exchange Act § 4(g)(4)(D), 15 U.S.C. § 78d(g)(4)(D).

Exchange Act § 4(g)(4)(E), 15 U.S.C. § 78d(g)(4)(E).

See Martin Arnold, Crypto Links with Banks Pose Threat

to Financial Stability, Says ECB, financial times (May 24,

2022), https://www.ft.com/content/5124fe2d-0f37-417389ba-fe9812e09e67; Bd. of Governors, Fed. Rsrv. Sys.,

Financial Stability Report (May 2022), https://www.

federalreserve.gov/publications/files/financial-stabilityreport-20220509.pdf.

Exchange Act § 39, 15 U.S.C. § 78pp.

Exchange Act § 39(b)(1)(A), 15 U.S.C. § 78pp(b)(1)(A).

See Press Release, Alt. Inv. Mgmt. Ass’n, AIMA Publishes

Guidance on Digital Asset Custody (Apr. 27, 2022), https://

www.aima.org/article/press-release-aima-publishesguidance-on-digital-asset-custody.html.

See Chainalysis, The 2022 Crypto Crime Report 3 (2022),

https://go.chainalysis.com/2022-Crypto-Crime-Report.html.

See id.

SEC, Off. of the Inv. Advoc., Report on OBJECTIVES,

Fiscal Year 2022, at 14, https://www.sec.gov/files/

sec-office-investor-advocate-report-on-objectives-fy2022.

pdf.

See Press Release, FTC, FTC Data Shows Huge Spike in

Cryptocurrency Investment Scams (May 17, 2021), https://

www.ftc.gov/news-events/news/press-releases/2021/05/

ftc-data-shows-huge-spike-cryptocurrency-investmentscams; see also Blockchain Analysis in a Multi-Asset

World: When Funds Cross Blockchains, Chainalysis (May

12, 2022), https://gateway.on24.com/wcc/eh/3537848/

lp/3752594/blockchain-analysis-in-a-multi-asset-worldwhen-funds-cross-blockchains (comparing 251 theft

incidents of crypto-assets in 2021 valued at $3.1 billion with

43 theft incidents in the first quarter of 2022 valued at $1.2

billion).

See Off. of the Chief Acct., SEC, Staff Accounting

Bulletin No. 121 (Mar. 31, 2022), 87 Fed. Reg. 21015 (Apr.

11, 2022) (to be codified at 17 C.F.R. pt. 211), https://www.

sec.gov/oca/staff-accounting-bulletin-121; but see Statement

from Hester M. Peirce, Comm’r, SEC, Response to Staff

Accounting Bulletin No. 121 (Mar. 31, 2022), https://www.

sec.gov/news/statement/peirce-response-sab-121-033122.

See generally Concept Release on Equity Market Structure,

Exchange Act Release No. 61358, 75 Fed. Reg. 3594 (Jan.

21, 2010).

Joint Industry Plan, Order Approving, as Modified, a

National Market System Plan Regarding Consolidated

Equity Market Data, Exchange Act Release No. 92586,

86 Fed. Reg. 44,142 (Aug. 11, 2021), https://www.

federalregister.gov/d/2021-17113.

See Market Data Infrastructure, Exchange Act Release No.

90610, 86 Fed. Reg. 18,596 (Apr. 9, 2021), https://www.

federalregister.gov/d/2020-28370.

Exchange Act § 4(g)(6), 15 U.S.C. § 78d(g)(6).

Exchange Act § 4(g)(6)(A)(i), 15 U.S.C. § 78d(g)(6)(A)(i).

Exchange Act § 4(g)(6)(B)(i), 15 U.S.C. § 78d(g)(6)(B)(i).

See Press Release, SEC, SEC Nearly Doubles Size of

Enforcement’s Crypto Assets and Cyber Unit (May 3,

2022), https://www.sec.gov/news/press-release/2022-78.

See Press Release, SEC, BlockFi Agrees to Pay $100

Million in Penalties and Pursue Registration of its Crypto

Lending Product (Feb 14, 2022), https://www.sec.gov/

news/press-release/2022-26; but see Statement from Hester

M. Peirce, Comm’r, SEC, Statement on Settlement with

BlockFi Lending LLC (Feb. 14, 2022), https://www.sec.

gov/news/statement/peirce-blockfi-20220214.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

See Consolidated Tape Association, Order Instituting

Proceedings To Determine Whether To Approve or

Disapprove the Twenty-Fifth Charges Amendment to

the Second Restatement of the CTA Plan and Sixteenth

Charges Amendment to the Restated CQ Plan, Exchange

Act Release No. 94309, 87 Fed. Reg. 11,763 (Mar. 2,

2022), https://www.federalregister.gov/d/2022-04334; see

also Joint Industry Plan, Order Instituting Proceedings

To Determine Whether To Approve or Disapprove the

Fifty-Second Amendment to the Joint Self-Regulatory

Organization Plan Governing the Collection, Consolidation

and Dissemination of Quotation and Transaction

Information for Nasdaq-Listed Securities Traded on

Exchanges on an Unlisted Trading Privileges Basis,

Exchange Act Release No. 94307, 87 Fed. Reg. 11,787

(Mar. 2, 2022), https://www.federalregister.gov/d/202204332.

See id. at 11,766.

See Joint Industry Plan, Order Approving the National

Market System Plan Governing the Consolidated Audit

Trail, Exchange Act Release No. 79318, 81 Fed. Reg.

84,696 (Nov. 23, 2016), https://www.sec.gov/rules/sro/

nms/2016/34-79318.pdf.

See Timeline, Consolidated Audit Trail, available at

https://www.catnmsplan.com/timeline/phase (last visited

June 7, 2022); see also Full CAIS Production Certification

and Compliance Deadlines Extended, Consolidated Audit

Trail, https://www.catnmsplan.com/announcements/

full-cais-production-certification-and-compliance-deadlinesextended (last visited June 7, 2022).

See Proposed Amendments to the National Market System

Plan Governing the Consolidated Audit Trail to Enhance

Data Security, Exchange Act Release No. 89632, 85 Fed.

Reg. 65,990 (Oct. 16, 2020), https://www.govinfo.gov/

content/pkg/FR-2020-10-16/pdf/2020-18801.pdf.

See Proposed Rule, Shortening the Settlement Cycle,

Exchange Act Release No. 94196 (Feb. 9, 2022), 87 Fed.

Reg. 10,436 (Feb. 24, 2022), https://www.federalregister.

gov/d/2022-03143.

See SEC, Recommendation of the Investor Advisory

Committee: Shortening the Trade Settlement Cycle in U.S.

Financial Markets (Feb. 12, 2015), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/settlementcycle-recommendation-final.pdf.

See SEC, Staff Report on Equity and Options Market

Structure Conditions in Early 2021 (Oct. 14, 2021), https://

www.sec.gov/files/staff-report-equity-options-marketstruction-conditions-early-2021.pdf.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

See Press Release, SEC, SEC Seeks Public Comment on

Transfer Agent Rules (Dec. 22, 2015), https://www.sec.gov/

news/pressrelease/2015-288.html.

Digital engagement practices, or DEPs, are utilized by

broker dealers and investment advisers as a means of

interacting with retail investors on digital platforms. These

include “social networking tools; games, streaks and other

contests with prizes; points, badges, and leaderboards;

notifications; celebrations for trading; visual cues; ideas

presented at order placement and other curated lists or

features; subscriptions and membership tiers; and chatbots.”

See Request for Information and Comments on BrokerDealer and Investment Adviser Digital Engagement

Practices, Related Tools and Methods, and Regulatory

Considerations and Potential Approaches; Information and

Comments on Investment Adviser Use of Technology To

Develop and Provide Investment Advice, Exchange Act

Release No. 92766 (Aug. 27, 2021), 86 Fed Reg. 49,067

(Sept. 1, 2021), https://www.federalregister.gov/d/202118901.

See Proposed Rule, Reporting of Securities Loans,

Exchange Act Release No. 93613, 86 Fed. Reg. 69,802

(Dec. 8, 2021), https://www.federalregister.gov/d/202125739.

Self-Regulatory Organizations, Cboe BYX Exchange, Inc.;

Notice of Filing of Amendment No. 2 and Order Approving

on an Accelerated Basis a Proposed Rule Change, as

Modified by Amendment No. 2, To Make Clarifying

Changes Regarding Its Periodic Auctions, Exchange Act

Release No. 94012, 87 Fed. Reg. 4,060 (Jan. 26, 2022),

https://www.federalregister.gov/d/2022-01465.

See Private Fund Advisers; Documentation of Registered

Investment Adviser Compliance Reviews, Investment

Adviser Act Release No. 5955, 17 C.F.R. pt. 275 (Feb. 9,

2022), https://www.sec.gov/rules/proposed/2022/ia-5955.

pdf [hereinafter Private Fund Advisers Release].

See Statement from Gary Gensler, Chairman, SEC,

Statement on Private Fund Advisers Proposal (Feb. 9,

2022), https://www.sec.gov/news/statement/genslerstatement-private-fund-advisers-proposal-020922.

See Fact Sheet, Private Fund Proposed Reforms, SEC (Feb.

9, 2022), https://www.sec.gov/files/ia-5955-fact-sheet.pdf.

See Private Fund Advisers Release, supra note 40, at section

II.A.

See id. at section II.B.

See id. at section II.C.

See id. at section II.D.

See id. at section II.E.

See id. at section III.

SEC, Recommendation of the Investor Advisory Committee

Regarding Human Capital Management Disclosure

(Mar. 28, 2019), https://www.sec.gov/spotlight/investoradvisory-committee-2012/human-capital-disclosurerecommendation.pdf.

See id.

See, e.g., Lauren Foster, The SEC Is Proposing ClimateChange Disclosures. What to Know., Barron’s (Mar.

19, 2022), https://www.barrons.com/articles/sec-climatechange-apple-stock-51647467317.

See Proposed Rule, Office of Management and Budget,

SEC Agency Rule List, Human Capital Management,

RIN 3235-AM88, https://www.reginfo.gov/public/do/

eAgendaViewRule?pubId=202110&RIN=3235-AM88.

See Enhanced Disclosures by Certain Investment Advisers

and Investment Companies about Environmental, Social,

and Governance Investment Practices, Investment Adviser

Act Release No. 6034, Investment Company Act Release

No. 34594, 17 C.F.R. pts. 200, 230, 232, 239, 249, 274, 279

(May 25, 2022) https://www.sec.gov/rules/proposed/2022/

ia-6034.pdf [hereinafter ESG Release].

See Statement from Gary Gensler, Chairman, SEC,

Statement on ESG Disclosures Proposal (May 25, 2022),

https://www.sec.gov/news/statement/gensler-statement-esgdisclosures-proposal-052522.

See Press Release, Bloomberg Intelligence, ESG May

Surpass $41 Trillion Assets in 2022, but Not Without

Challenges, Finds Bloomberg Intelligence (Jan. 24,

2022), https://www.bloomberg.com/company/press/

esg-may-surpass-41-trillion-assets-in-2022-but-not-withoutchallenges-finds-bloomberg-intelligence.

See 2022 Investment Company Fact Book, Investment

Company Institute, at 42, https://www.icifactbook.org/

pdf/2022_factbook.pdf.

See Katanga Johnson & Ross Kerber, U.S. SEC Unveils

Rules to Ensure ESG Funds Follow Through on

Investments, Reuters (May 25, 2022) (citing Refinitiv

Lipper data).

See, e.g., Off. of the Inv. Advoc., Report on Activities,

Fiscal Year 2020, at 9, https://www.sec.gov/files/

sec-investor-advocate-report-on-activities-2020.pdf (“We

are also concerned with ‘greenwashing,’ the practice of

making misleading claims regarding companies’ or funds’

ESG credentials in order to draw the interest of investors

who place value in ESG matters. Greenwashing is likely

to grow increasingly problematic as companies and funds

viewed as ESG-friendly continue to attract assets at an

accelerating pace.”).

Id.

See James Chalmers, Emma Cox, & Nadja Picard,

The Economic Realities of ESG, PwC (Oct. 28, 2021)

(highlighting results of PwC 2021 Global Investor Survey).

53 SEC, Off. of the Inv. Advoc., Report on Objectives, Fiscal

Year 2022, at 5, https://www.sec.gov/files/sec-officeinvestor-advocate-report-on-objectives-fy2022.pdf.

See The Enhancement and Standardization of ClimateRelated Disclosures for Investors, Securities Act Release

No. 33-11042, Exchange Act Release No. 34-94478,

17 C.F.R. pts. 210, 229, 232, 239, 249 (Mar. 21, 2022)

https://www.sec.gov/rules/proposed/2022/33-11042.pdf

[hereinafter Climate Release].

Id.

57 SEC, Fact Sheet, The Enhancement and Standardization of

Climate-Related Disclosure for Investors at 2, https://www.

sec.gov/files/33-11042-fact-sheet.pdf.

See Statement from Hester Peirce, Comm’r, SEC, We

Are Not the Securities and Environment Commission –

At Least Not Yet (Mar. 21, 2022), https://www.sec.gov/

news/statement/peirce-climate-disclosure-20220321; see

also Letter from Joe Manchin III, Sen., to Gary Gensler,

Chairman, SEC (Apr. 4, 2022), https://www.manchin.

senate.gov/imo/media/doc/SEC%20ClimateDisclosure%20

Letter.pdf?cb.

Climate Release, supra note 54, at 210.

See id.

Id.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

See Investment Company Names, Investment Company Act

Release Act No. 34593 (May 25, 2022), https://www.sec.

gov/rules/proposed/2022/ic-34593.pdf; see also Investment

Company Names, Investment Company Act Release No.

24828 (Jan. 17, 2001), 66 FR 8509 (Feb. 1, 2001), https://

www.sec.gov/rules/final/ic-24828.htm.

See id. at section II.A.1.

See id. at section II.A.2.

See id. at section II.A.4.

See id. at section II.B.

See id. at section II.D.

See id. at section II.E.

See, e.g., Share Repurchase Disclosure Modernization,

Exchange Act Rel. No. 93783, 87 Fed. Reg. 8443, 8451

(Feb. 15, 2022); Rule 10b5-1 and Insider Trading, Exchange

Act Rel. No. 93782, 87 Fed. Reg. 8686 (Feb. 15, 2022);

Prohibition Against Fraud, Manipulation, or Deception

in Connection With Security-Based Swaps; Prohibition

Against Undue Influence Over Chief Compliance Officers;

Position Reporting of Large Security-Based Swap Positions,

Exchange Act Rel. No. 93784, 87 Fed. Reg. 6652 (Feb. 4,

2022).

See Share Repurchase Disclosure Modernization, Exchange

Act Rel. No. 93783, 87 Fed. Reg. 8443, 8451 (Feb. 15,

2022).

See Foundations for Evidence-Based Policymaking Act of

2018, Pub. L. No. 115-435, 132 Stat. 5529 (Jan. 14, 2019).

The requirement in 44 U.S.C. 3506 applies to the SEC:

the term “agency” is defined in 44 U.S.C. 3502 and

includes any “independent regulatory agency,” which, in

turn, is defined to include the Securities and Exchange

Commission. See Section 3502(1) and (5).

The statute defines the term “data” to mean “recorded

information, regardless of form or the media on which

the data is recorded” and the term “data asset” to mean

“a collection of data elements or data sets that may be

grouped together.” 44 U.S.C. 3502(16) and (17).

See 5 U.S.C. 552 et seq.

See Off. of the Att’y Gen., The Freedom of Information

Act (FOIA) (2009).

O F F I C E O F T H E I N V E S T O R A D V O C AT E

See 44 U.S.C. 3502(22) (defining the term “public data

asset” to mean “a data asset, or part thereof, maintained by

the Federal Government that has been, or may be, released

to the public, including any data asset, or part thereof,

subject to disclosure under section 552 of title 5 [i.e., the

Freedom of Information Act]”); 44 U.S.C. 3506(b)(6)(B)

(with respect to general information resources management,

requiring each agency, in accordance with guidance from

the Office of Management and Budget Director, to make

each public data asset available as an open Government data

asset and under an open license, where “open Government

data asset” is defined in Section 3502(20) to mean, among

other things, machine-readable); 44 U.S.C. 3511 (requiring

each agency to develop and maintain a comprehensive data

inventory and requiring each agency to submit public data

assets as open Government data assets to a single public

interface online as a point of entry dedicated to sharing

agency data assets with the public, which shall be known as

the “Federal data catalogue”).

See 44 U.S.C. 3501 et seq. (see in particular Section

3506(b)(1)(C) and (c)(3)(H)).

See Off. of Mgmt. & Budget, Exec. Off. of the

President, OMB M-13-13, Open Data Policy—Managing

Information as an Asset (2013); Off. of Mgmt. & Budget,

Exec. Off. of the President, OMB Circular A-130,

Management of Federal Information Resources (1996).

See 44 U.S.C. 3511(a)(1) (requiring the head of each

agency, to the maximum extent practicable, to develop and

maintain a comprehensive data inventory that accounts for

all data assets created by, collected by, under the control or

direction of, or maintained by the agency).

88 See 44 U.S.C. 3506(b)(6)(A) (with respect to general

information resources management, requiring each

agency, in accordance with guidance from the Office of

Management and Budget Director, to make each data asset

of the agency available in an open format).

89 See 44 U.S.C. 3511(a)(2)(E) (requiring guidance from the

Office of Management and Budget Director to include

specified criteria for the head of an agency to use in

determining whether a particular data asset should not be

made publicly available). The Freedom of Information Act

authorizes agencies to withhold nine enumerated categories

of information. The Freedom of Information Act does

not itself prohibit the agency from voluntarily disclosing

the exempted information in its discretion, but there may

be other statutes prohibiting disclosure, or other relevant

considerations.

See 44 U.S.C. 3504(b)(6)(C) (requiring the Office of

Management and Budget Director to issue guidance for

agencies to implement Section 3506(b)(6) in a manner

that takes into account, among other things, the cost and

benefits to the public of converting a data asset into a

machine-readable format that is accessible and useful to the

public); 44 U.S.C. 3506(d)(6)(B) (requiring, with respect

to information dissemination, each agency to provide the

public with the opportunity to request specific data assets

to be prioritized for disclosure and to provide suggestions

for the development of agency criteria with respect to

prioritizing data assets for disclosure); 44 U.S.C. 3511(a)

(2)(E) (requiring the Office of Management and Budget

Director to issue guidance for agencies to develop and

maintain comprehensive data inventories; the guidance

shall include criteria for the head of an agency to use in

determining whether a particular data asset should not be

made publicly available in a manner that takes into account,

among other things, the cost and benefits to the public of

converting the data into a format that could be understood

and used by the public).

The U.S. Government Accountability Office reported

that as of December 2021 the Office of Management

and Budget had not issued the statutorily-required

implementation guidance to agencies on making data

open by default. The Government Accountability

Office report’s first recommendation is for the Office of

Management and Budget to issue that guidance. See U.S.

Gov’t Accountability Off., GAO-22-104574, Open Data:

Additional Action Required for Full Public Access 36

(2021).

See, e.g., Rick A. Fleming, Investor Advocate, SEC,

Remarks Before XBRL US Investor Forum 2016: Finding

Value with Smart Data: Improving Disclosure with Smart

Data (Oct. 24, 2016), https://www.sec.gov/news/speech/

improving-disclosure-with-smart-data.html.

Exchange Act § 4(g)(8)(B), 15 U.S.C. § 78d(g)(8)(B).

Exchange Act § 4(g)(8)(D), 15 U.S.C. § 78d(g)(8)(D).

As used in this report, the term “Ombudsman” may refer

to the Ombudsman, the Ombudsman and staff in the Office

of the Ombudsman, and, at times, to staff, contractors,

and interns in the Office of the Investor Advocate directly

supporting the ombudsman function.

See SEC, About the SEC, https://www.sec.gov/about.shtml

(last visited June 7, 2022).

The Primary Issue Category labels are similar to the category

labels used by other divisions and offices in public reports,

where the category labels are based upon the submitter’s

own characterization or description of the issue. See, for

example, SEC, Off. of the Whistleblower, Whistleblower

Program 2020 Annual Report to Congress, at 28 and

related footnote 80: “This breakdown reflects the categories

selected by whistleblowers and, thus, the data represents

the whistleblower’s own characterization of the violation

type.” The exceptions in this Ombudsman’s Report are

the “Non-SEC/Other Matters” category label used for

matters not under the jurisdiction of the SEC, and the

“Atypical Matters” category label used for matters where the

submitter’s characterization or description of the issue makes

it difficult to determine the nature of the complaint.

A crypto exchange is a platform on which an investor

can buy and sell crypto. These exchanges can be used

to trade one crypto for another, or to buy crypto using

regular currency, such as US dollars. See Want to Buy

Crypto? Here’s What to Look for in a Crypto Exchange,

NextAdvisor (May 3, 2022) https://time.com/nextadvisor/

investing/cryptocurrency/what-are-cryptocurrencyexchanges/#:~:text=A%20crypto%20exchange%20

is%2%20a,of%20the%20cryptocurrencies%20they%20offer.

See Scammers Defraud Victims of Millions of Dollars in New

Trend in Romance Scams, Public Service Announcement,

Federal Bureau of Investigation (Sept. 16, 2021) https://

www.ic3.gov/Media/Y2021/PSA210916.

100 SEC, Online Portal, Report Suspected Securities Fraud or

Wrongdoing, https://www.sec.gov/tcr (last visited June 7,

2022).

101 See Investor.gov, Glossary, Alternative Trading Systems

(ATSs), https://www.investor.gov/introduction-investing/

investing-basics/glossary/alternative-trading-systems-atss

(last visited June 7, 2022).

102 See SEC, Short Position and Short Activity Reporting by

Institutional Investment Managers, Exchange Act Release

No. 34-94313 (Feb. 25, 2022); https://www.sec.gov/rules/

proposed/2022/34-94313.pdf (proposing release).

103 See Climate Release, supra note 54.

104 See Investor Bulletin, Broker-Dealer/Customer Arbitration

(Dec. 20, 2016) https://www.sec.gov/oiea/investor-alertsbulletins/ib_arbitration.html.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

105 See SEC, Information for Harmed Investors, https://www.

sec.gov/enforce/information-for-harmed-investors (last

visited June 7, 2022).

106 See 2021 FINRA Arbitrators Guide, at p. 11 (February

2021) (“FINRA makes available an arbitration forum—

pursuant to rules approved by the SEC—but has no part in

deciding the award.”), available at https://www.finra.org/

sites/default/files/arbitrators-ref-guide.pdf.

107 See FINRA Rule 12904.

108 A Court may issue an order vacating an arbitration award

in any of the following cases: “(1) where the award was

procured by corruption, fraud, or undue means; (2) where

there was evident partiality or corruption in the arbitrators,

or either of them; (3) where arbitrators were guilty of

misconduct in refusing to postpone the hearing, upon

sufficient cause shown, or in refusing to hear evidence

pertinent and material to the controversy; or of any other

misbehavior by which the rights of any party have been

prejudiced; or (4) where the arbitrators exceeded their

powers, or so imperfectly executed them that a mutual,

final, and definite award upon the subject matter was not

made.” 9 U.S.C. § 10(a).

109 FINRA Rule 12505.

110 See 2021 FINRA Dispute Resolution Services Arbitrator’s

Guide, at p. 41 (February 2021), https://www.finra.org/sites/

default/files/arbitrators-ref-guide.pdf.

111 See FINRA Rule 12200. See also Arbitration Overview,

FINRA.org, (n.d.), https://www.finra.org/arbitrationmediation/arbitration-overview#:~:text=A%20broker%20

or%20a%20brokerage,firms%20and%20brokers%2C%20

or%20brokers.

112 See Christine Lazaro and Michael S. Edmiston, Op Ed:

Costly Forced Arbitration against RIAS Harms Investors,

(January 14, 2022) (hereinafter PIABA Op Ed), https://

www.piaba.org/piaba-newsroom/oped-costly-forcedarbitration-against-rias-harms-investors-christinelazaro-and.

113 See, e.g., McMahon v. Shearson/American Express,

Inc., 482 U.S. 220, 229-30 (1987) (parties to arbitration

trade “the procedures and opportunity for review of the

courtroom for the simplicity, informality and expedition of

arbitration”).

114 Id.

O F F I C E O F T H E I N V E S T O R A D V O C AT E

115 See, e.g., JAMS, Arbitration: A Powerful Tool for Achieving

Fair, Expeditious Resolution, https://www.jamsadr.com/

arbitration (last visited May 16, 2022) (“Arbitration at

JAMS allows the parties to select a neutral with industryspecific expertise and to define the process best suited to

resolve their dispute…”).

116 Press Release, Sen. Jeff Merkley (D-OR) & U.S. Rep. Bill

Foster, (D-IL), Foster, Merkley Lead Bicameral Investor

Choice Act (Dec. 6, 2019) (hereinafter Foster, Merkley

Press Release), https://www.merkley.senate.gov/news/

press-releases/foster-merkley-lead-bicameral-investorchoice-act-2019 (“[W]hen an investment advisor or broker

chooses the judge, pays the judge, and promises future

business to the judge, you know that the system is rigged

against you.”) (quoting Sen. Jeff Merkley).

117 See PIABA Op Ed, supra note 112.

118 See generally Foster, Merkley Press Release, supra note

116.

119 See FINRA, Dispute Resolution Statistics, https://www.

finra.org/arbitration-mediation/dispute-resolution-statistics.

120 See FINRA Regulatory Notice 22-05 (Feb. 15, 2022)

(hereinafter FINRA Reg. Notice 22-05), https://www.finra.

org/sites/default/files/2022-02/Regulatory-Notice-22-05.

pdf.

121 FINRA, Rule 2165 (2022), https://www.finra.org/rulesguidance/rulebooks/finra-rules/2165.

122 FINRA, Rule 2165(a) (2022) https://www.finra.org/rulesguidance/rulebooks/finra-rules/2165.

123 FINRA Reg. Notice 22-05, at p. 3.

124 Id. at p. 4.

125 Id.

126 Id.

127 Id. at p. 1.

128 Press Release, SEC, SEC Announces Pilot Securities

Arbitration Clinic to Help Small Investors—Levitt

Responds to Concerns Voiced at Town Meetings, 97-101

(Nov. 12, 1997), https://www.sec.gov/news/press/

pressarchive/1997/97-101.txt.

129 For more information on the significance of law school

investor advocacy clinics to retail investors, see Report on

Activities, Fiscal Year 2019, at 33-34.

142 See Special Purpose Acquisition Companies, Shell

Companies, and Projections, Securities Act Release No.

33-11048 (Mar. 30, 2022) (proposing release).

130 For an overview of the Law School Clinic Outreach

Program (LSCOP), see SEC, Off. of the Inv. Advoc.,

Report on Objectives, Fiscal Year 2021, at 33, https://

www.sec.gov/files/sec-office-investor-advocate-report-onobjectives-fy2021.pdf.

143 SEC, Recommendation of the Investor Advisory Committee

Regarding Recommendation of the Investor-as-Owner

Subcommittee on Rule 10b5-1 Plans (Sept. 9, 2021), https://

www.sec.gov/spotlight/investor-advisory-committee-2012/

draft-recommendation-of-the-iao-subcommittee-on-10b5-1plans-082621.pdf.

131 For a timeline highlighting the Ombudsman’s formal

outreach and engagement efforts from the start of the

LSCOP in October 2016 through June 2019, see id. at

34-35.

144 See Rule 10b5-1 and Insider Trading, Securities Act

Release No. 33-11013, 87 Fed. Reg. 8686 (Jan. 13, 2022)

(proposing release).

132 Participating law schools included (in alphabetical order):

Benjamin N. Cardozo School of Law, Cornell Law School,

Fordham University School of Law, Howard University

School of Law, New York Law School, Northwestern

Pritzker School of Law, Pace University School of Law,

Seton Hall University School of Law, St. John’s University

School of Law, University of Miami School of Law and the

University of Pittsburgh School of Law.

133 Exchange Act § 39(a), 15 U.S.C. § 78pp(a).

134 Id.

135 Exchange Act § 39(a)(2)(B), 15 U.S.C. § 78pp(a)(2)(B).

136 Exchange Act § 39(g), 15 U.S.C. § 78pp(g).

137 Exchange Act § 39(h), 15 U.S.C. § 78pp(h).

138 According to Exchange Act Section 4(g)(6)(B)(ii), 15

U.S.C. § 78d(g)(6)(B)(ii), a Report on Activities must

include several enumerated items, and it may include “any

other information, as determined appropriate by the Investor

Advocate.”

139 17 C.F.R. §§ 200.735-3(b)(2)(i), 230.122 (2014); Exchange

Act § 24(b), 15 U.S.C. § 78x; 5 U.S.C. § 552a(i)(1);

SECR18-2, Section 8.5 (Nonpublic Information) (July 31,

2005).

140 SEC, Recommendation of the Investor Advisory Committee

Regarding Individual Retirement Accounts (Dec. 2, 2021),

https://www.sec.gov/spotlight/investor-advisory-committee2012/20211202-ira-recommendation.pdf.

141 SEC, Recommendation of the Investor Advisory Committee

Regarding Recommendation of the Investor-as-Owner

Subcommittee on Special Purpose Acquisition Companies

(Sept. 9, 2021), https://www.sec.gov/spotlight/investoradvisory-committee-2012/draft-recommendation-of-the-iapand-iao-subcommittees-on-spacs-082621.pdf.

145 SEC, Recommendation of the Investor Advisory Committee

Regarding Minority and Underserved Inclusion in

Investment and Financial Services (Mar. 11, 2021), https://

www.sec.gov/spotlight/investor-advisory-committee2012/20210311-minority-and-underserved-inclusionrecommendation.pdf.

146 SEC, Recommendation of the Investor Advisory Committee

Regarding Recommendation of the Market Structure

Subcommittee on Credit Rating Agencies (Mar. 11, 2021),

https://www.sec.gov/spotlight/investor-advisory-committee2012/20210311-credit-rating-agencies-recommendation.

pdf.

147 SEC, Recommendation of the Investor Advisory Committee

Regarding Recommendation of the Investor as Owner

Subcommittee on Accounting and Financial Reporting

Disclosure (May 5, 2020), https://www.sec.gov/spotlight/

investor-advisory-committee-2012/accounting-andfinancial-disclosure.pdf.

148 See Coronavirus (COVID-19)—Disclosure Considerations

Regarding Operations, Liquidity, and Capital Resources,

SEC Div. of Corp. Fin. Disclosure Guidance Topic No. 9A

(June 23, 2020), https://www.sec.gov/corpfin/covid-19disclosure-considerations.

149 See Julie Steinberg, FASB to Explore Greater Disclosure of

Supply-Chain Financing, Wall St. J. (Oct. 22, 2020, 6:05

AM ET), https://www.wsj.com/articles/fasb-to-exploregreater-disclosure-of-supply-chain-financing-11603361147.

150 See Management’s Discussion and Analysis, Selected

Financial Data, and Supplementary Financial Information,

Securities Act Release No. 10890 (Nov. 19, 2020), https://

www.sec.gov/rules/final/2020/33-10890.pdf.

151 See FASB, Exposure Draft, Disclosure of Supplier Finance

Program Obligations (Dec. 20, 2021) https://www.fasb.

org/page/getarticle?uid=fasb_Media_Advisory_12-20-21_

Body_0228221200.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

152 SEC, Recommendation of the Investor Advisory Committee

Regarding Recommendation of the Investor as Owner

Subcommittee on ESG Disclosure (May 14, 2020), https://

www.sec.gov/spotlight/investor-advisory-committee-2012/

esg-disclosure.pdf.

153 Statement from Allison Herren Lee, Acting Chair, SEC,

Statement on the Review of Climate-Related Disclosure

(Feb. 24, 2021), https://www.sec.gov/news/publicstatement/lee-statement-review-climate-related-disclosure.

154 Press Release, SEC, Division of Examinations Announces

2021 Examination Priorities (Mar. 3, 2021), https://www.

sec.gov/news/press-release/2021-39.

155 Press Release, SEC, SEC Announces Enforcement Task

Force Focused on Climate and ESG Issues (Mar. 4, 2021),

https://www.sec.gov/news/press-release/2021-42.

156 Statement from Allison Herren Lee, Acting Chair, SEC,

Public Input Welcomed on Climate Change Disclosures

(Mar. 15, 2021), https://www.sec.gov/news/publicstatement/lee-climate-change-disclosures.

157 See The Enhancement and Standardization of ClimateRelated Disclosures for Investors, Securities Act Release

No. 33-11042, 87 Fed. Reg. 21334, (Mar. 21, 2022)

(proposing release).

158 See ESG Release, supra note 64.

159 SEC, Recommendation of the Investor Advisory Committee

Regarding Recommendation on Disclosure Effectiveness

(May 21, 2020), https://www.sec.gov/spotlight/investoradvisory-committee-2012/disclosure-effectiveness.pdf.

160 See Tailored Shareholder Reports, Treatment of Annual

Prospectus Updates for Existing Investors, and Improved

Fee and Risk Disclosure for Mutual Funds and ExchangeTraded Funds; Fee Information in Investment Company

Advertisements, Investment Company Act Release Act

No. 33963 (Aug. 5, 2020), https://www.sec.gov/rules/

proposed/2020/33-10814.pdf.

161 SEC, Recommendation of the Investor Advisory Committee

Regarding SEC Guidance and Rule Proposals on Proxy

Advisors and Shareholder Proposals (Jan. 24, 2020), https://

www.sec.gov/spotlight/investor-advisory-committee-2012/

sec-guidance-and-rule-proposals-on-proxy-advisorsandshareholder-proposals.pdf.

162 See Exemptions from the Proxy Rules for Proxy Voting

Advice, Release No. 34-89372 (July 22, 2020) (adopting

release); see also Amendments to Exemptions from

the Proxy Rules for Proxy Voting Advice, Release No.

34-87457, 84 Fed. Reg. 66518 (Dec. 4, 2019) (proposing

release).

O F F I C E O F T H E I N V E S T O R A D V O C AT E

163 See Procedural Requirements and Resubmission Thresholds

Under Exchange Act Rule 14a-8, Release No. 34-89964

(Sept. 23, 2020).

164 Statement from Gary Gensler, Chairman, SEC, Statement

on the Application of the Proxy Rules to Proxy Voting

Advice (June 1, 2021), https://www.sec.gov/news/publicstatement/gensler-proxy-2021-06-01.

165 SEC, Div. of Corp. Fin., Statement on Compliance with the

Commission’s 2019 Interpretation and Guidance Regarding

the Applicability of the Proxy Rules to Proxy Voting Advice

and Amended Rules 14a-1(1), 14a-2(b), 14a-9 (June 1,

2021) [hereinafter SEC Staff Statement on Proxy Rules],

https://www.sec.gov/news/public-statement/corp-fin-proxyrules-2021-06-01.

166 SEC, Recommendation of the Investor Advisory Committee

Regarding Exchange Rebate Tier Disclosure (Jan. 24,

2020), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/exchange-rebate-tier-disclosure.pdf.

167 SEC, Recommendation of the Investor Advisory

Committee: Proxy Plumbing (Sept. 5, 2019), https://www.

sec.gov/spotlight/investor-advisory-committee-2012/

iac-recommendation-proxy-plumbing.pdf.

168 See Press Release, SEC, SEC Reopens Comment Period

for Universal Proxy (Apr. 16, 2021), https://www.sec.gov/

news/press-release/2021-64.

169 See Universal Proxy, Exchange Act Release No. 93596;

Investment Company Act Release No. 34419, https://www.

sec.gov/rules/final/2021/34-93596.pdf.

170 SEC, Recommendation of the Investor Advisory

Committee: Structural Changes to the U.S. Capital Markets

Re: Investment Research in a Post-MiFID II World (July

25, 2019), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/investment-research-post-mfid-ii-world.

pdf.

171 See Press Release, SEC, SEC Announces Extension

of Temporary Measure to Facilitate Cross-Border

Implementation of the European Union’s MiFID II’s

Research Provisions (Nov. 4, 2019), https://www.sec.gov/

news/press-release/2019-229.

172 SEC, Recommendation of the Investor Advisory Committee

Regarding Human Capital Management Disclosure

(Mar. 28, 2019), https://www.sec.gov/spotlight/investoradvisory-committee-2012/human-capital-disclosurerecommendation.pdf.

173 See Modernization of Regulation S-K Items 101, 103, and

105, Exchange Act Release No. 89670, 85 Fed. Reg. 63726

(Oct. 8, 2020).

174 SEC, Recommendation of the Investor Advisory Committee

in Support of the Transaction Fee Pilot for NMS Stocks

(Sept. 13, 2018), https://www.sec.gov/spotlight/investoradvisory-committee-2012/recommendation-transaction-feepilot-for-nms-stocks.pdf.

183 SEC, Recommendation of the Investor Advisory

Committee: Shortening the Trade Settlement Cycle in U.S.

Financial Markets, February 12, 2015, http://www.sec.gov/

spotlight/investor-advisorycommittee-2012/settlementcycle-recommendationfinal.pdf.

175 SEC, Transaction Fee Pilot for NMS Stock, Release No.

34-84875 (Dec. 19, 2018), https://www.sec.gov/rules/

final/2018/34-84875.pdf.

184 See Proposed Rule, Shortening the Settlement Cycle,

Exchange Act Release No. 94196 (Feb. 9, 2022), 87 Fed.

Reg. 10436 (Feb. 24, 2022), https://www.federalregister.

gov/d/2022-03143.

176 See NYSE L.L.C. v. SEC, 962 F.3d 541 (D.C. Cir. 2020).

177 SEC, Recommendation of the Investor Advisory

Committee: Financial Support for Law School Clinics that

Support Investors (Mar. 8, 2018), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/law-clinicsrecommendation.pdf.

178 SEC, Recommendation of the Investor Advisory

Committee: Dual Class and Other Entrenching Governance

Structures in Public Companies (Mar. 8, 2018), https://

www.sec.gov/spotlight/investor-advisory-committee-2012/

recommendation-on-dual-class-shares.pdf.

179 SEC, Recommendation of the Investor Advisory

Committee Regarding Mutual Fund Cost Disclosure

(Apr. 14, 2016), https://www.sec.gov/spotlight/investoradvisory-committee-2012/recommendation-mf-feedisclosure-041916.pdf.

180 See Request for Comment on Fund Retail Investor

Experience and Disclosure, Securities Act Release No.

10503, Exchange Act Release No. 83376, Investment

Company Act Release No. 33113, 83 Fed. Reg. 26891 (June

11, 2018).

181 See Updated Disclosure Requirements and Summary

Prospectus for Variable Annuity and Variable Life Insurance

Contracts, Securities Act Release No. 10569, Exchange Act

Release No. 84508, Investment Company Act Release No.

33286, 83 Fed. Reg. 61730 (Nov. 30, 2018).

182 See Updated Disclosure Requirements and Summary

Prospectus for Variable Annuity and Variable Life Insurance

Contracts, Securities Act Release No. 10765, Exchange Act

Release No. 88358, Investment Company Act Release No.

33814, 85 Fed. Reg. 25964 (Mar. 11, 2020).

185 SEC, Recommendation of the Investor Advisory

Committee: Accredited Investor Definition (Oct. 9,

2014), https://www.sec.gov/spotlight/investor-advisorycommittee-2012/investment-advisor-accredited-definition.

pdf.

186 See Accredited Investor Definition, Securities Act Release

No. 10824, 85 Fed. Reg. 64234 (Oct. 9, 2020) (adopting

release); see also Amending the “Accredited Investor”

Definition, Securities Act Release No. 10734, 85 Fed. Reg.

2574 (Jan. 15, 2020) (proposing release).

187 SEC, Recommendations of the Investor Advisory

Committee: Impartiality in the Disclosure of Preliminary

Voting Results (Oct. 9, 2014), https://www.sec.gov/

spotlight/investor-advisory-committee-2012/impartialitydisclosure-prelim-voting-results.pdf.

188 SEC, Recommendations of the Investor Advisory

Committee Regarding SEC Rulemaking to Explore

Universal Proxy Ballots (July 25, 2013), https://www.sec.

gov/spotlight/investor-advisory-committee-2012/universalproxy-recommendation-072613.pdf.

189 See Universal Proxy, Exchange Act Release No. 79164,

Investment Company Act Release No. 32339, 81 Fed. Reg.

79122 (Nov. 10, 2016).

190 See SEC Staff Statement on Proxy Rules, supra note 165.

191 See Universal Proxy, Exchange Act Release No. 93596;

Investment Company Act Release No. 34419, 86 Fed.

Reg. 68330 (Nov. 17, 2021), https://www.sec.gov/rules/

final/2021/34-93596.pdf.

REPORT ON OBJECTIVES: FISCAL YEAR 2023

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.