On June 12, 2012, the newly-formed Investor Advisory Committee of the SEC held its first meeting. SEC Chairman Mary Schapiro told the committee members that “you have made a commitment to ensuring that the voice of the investor remains front and center at the SEC,” while Commissioner Luis Aguilar, an ardent backer of the Committee, told members that their “work will be vital to the SEC and the American public,” asking them to focus on the needs of individual investors while noting that “only 15% of Americans trust the stock market.”

In June 2009, the SEC established an Investor Advisory Committee as required under the Federal Advisory Committee Act. However, the initial committee was terminated in November 2010, and a new committee was to be re-constituted to meet the Commission’s statutory obligation under the Dodd-Frank Act. As discussed here, in September 2011, the SEC stated that a new Committee would be formed. At the time, Commissioner Aguilar called the Investor Advisory Committee “essential” and noted that “[I]n the current environment, revelations of egregious fraudulent conduct and recent market conditions continue to demonstrate the vulnerability of investors.”

As discussed here, on April 9, 2012, the SEC announced that it had formed the new Investor Advisory Committee and identified the 21 members who will serve on that Committee. The new Committee was formed to “advise the Commission on regulatory priorities, the regulation of securities products, trading strategies, fee structures, the effectiveness of disclosure, and on initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace.”

In her welcoming remarks at the June 12, 2012 meeting, Chairman Schapiro stated that she was “so pleased that investors will have a permanent and formalized voice here at the Commission” through the new committee, adding that “[a]s a body, you will have an impact on our thinking, the focus of our work, and the ultimate decisions we make on behalf of investors.” She further told Committee members that their purpose, as a committee is to advise and consult with the Commission on:

• regulatory priorities;

• issues relating to the regulation of securities products, trading strategies, fee structures and the effectiveness of disclosure;

• initiatives to protect investor interest; and

• initiatives to promote investor confidence and market integrity.

She also stated the Committee’s work “will be supplemented by the addition of the SEC’s new Office of the Investor Advocate, which also was established by the Dodd-Frank Act,” noting that the Commission is “in the process of receiving applications for the new Investor Advocate, who will lead that office.”

Commissioner Aguilar also addressed the Committee, urging them “to focus on the needs of retail investors.” He noted the trend of investors withdrawing cash from U.S. equity funds (which may a natural result of the aging population of baby boomers) and said that research suggests that “there may also be a decline in the willingness of even younger investors to invest in the stock market” (citing the May 2010 “Flash Crash,” and other events such as the Facebook IPO, discussed here). He noted that “most individual investors lack the time and resources to mobilize in support of policy positions … and make their needs known,” and urged the Committee “to put individual retail investors foremost in its considerations.”