Thank you, George [Georgiev]. I am grateful to you and the rest of the new leadership team for taking on the important responsibility of guiding this Committee’s work.
Thanks also to today’s panelists and to the Committee members. A warm welcome to our four new members, Patrick, Adriana, Sheldon, and John.1 We selected you as members because we believe you have something uniquely helpful to add to the conversation. With its diverse experiences and perspectives, this Committee can be a valuable advisor to the Commission. Active participation by all members maximizes the Committee’s effectiveness. You do not need to be an expert in the matter under discussion to ask questions of panelists; often a fresh look at an issue from someone who has not been steeped in it can help clarify the problem or identify a solution.
Today’s first panel is a continuation of the IAC’s work on retail investor access to private market assets. The panel will discuss specifically the potential for retail investor confusion around redemption gating, fee structures, and valuation methods and strategies that the securities industry and regulators could implement to avoid investor confusion. I have several questions for your consideration during the discussion:
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Doesn’t the existence of features of these funds such as gates and incentive fee structures help focus investors on the illiquid nature of the funds’ portfolios and the need for investors to consider whether the fund is compatible with their liquidity needs?
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Would requiring registered funds to include additional disclosures increase the likelihood that fund investors, already overwhelmed by the disclosures they receive, simply ignore all fund disclosures?
- Is improved investor education the best path to address concerns about investor confusion?
The second panel revisits the topic of voting by passive index funds. I pose the following questions for discussion:
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As I noted at the Committee’s June 5, 2025 meeting, the right to vote belongs to the fund itself, not to the fund’s adviser or its investors.2 A fund’s board may delegate voting power to its adviser, but the adviser must exercise it in the interests of the fund alone. Can a pass-through voting policy be compatible with an adviser’s fiduciary duty to the fund?
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Would pass-through voting serve only the interests of the subset of fund investors that choose to express their preferences, which may be inconsistent with the fund’s best interest?
- How could mirror voting, where the fund votes its shares in the same proportion as the other shares in a company are voted (so the fund would vote some shares in favor of and some shares against a proposal), serve the interests of the fund?
I also have some questions to contribute to what I hope will be a vibrant discussion of both draft recommendations under consideration today. New members should feel free to participate in the discussions and the votes. And I remind seasoned members of the value in sharing at this public meeting the discussions you had behind closed doors between meetings as you crafted the draft recommendations. Having access to all members’ views and thoughts that shaped your vote greatly enhances the Commission’s review and understanding of the issues that are the subject of the Committee’s recommendations. I appreciate the draft recommendations regarding fund proxy voting, which give us some concrete things to consider. The draft follows the Committee’s excellent discussion on this matter at its last meeting.3 My questions are:
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Would permitting fund opt-in retail voting programs similar to the approach outlined in the Exxon Mobil Corporation no-action letter sufficiently address funds’ ability to achieve quorum, or would the Commission need to do more?
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Do you share my concern that the medium-term action recommendations would deprive shareholders of their voting rights in certain consequential matters, such as certain changes in fundamental policies?
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The first long-term recommendation would allow funds held through intermediaries to communicate directly with their shareholders on proxy voting matters. During the discussion we heard about the anger of shareholders at being contacted. Would this change anger and confuse investors? Would objecting beneficial owners be covered? Would this recommendation significantly reduce costs and improve voter participation?
I look forward to the Committee’s discussion of its draft recommendation on our semiannual reporting proposal, which mirrors concerns that we have heard from commenters in the first half of the comment period. As part of that discussion, please consider the following questions:
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The draft recommendation suggests that one of the main justifications for the proposal was combatting short-termism, but the proposal only briefly raised this rationale and declined to put much weight in it: “There is some evidence that decreasing reporting frequency could reduce short termism. Overall, however, the effects of reporting frequency on real corporate decisions are mixed.”4 In speaking recently with companies, particularly small ones, I have heard concerns not that quarterly reporting is driving short-termism, but that the cost of the Form 10-Q does not yield proportionate benefits for investors. To answer this concern, should we streamline the reporting burden rather than adjusting whether that burden is quarterly?
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If so, is that exercise better undertaken in conjunction with this rulemaking or as part of the Commission’s broader project of assessing disclosure requirements?
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Even if we were not to make quarterly reporting optional for all companies, should we make it optional for smaller companies?
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I appreciate that the Committee is providing feedback on a current Commission initiative. In that vein, I recommend for your future consideration two important, albeit technical, proposals related to filer status determination and the registered offering process. These proposals are part of the Commission’s effort to encourage companies to go and stay public. Do you have other suggestions about how the Commission can achieve this important pillar of its agenda?
Thank you again for your willingness to dedicate so much of your time to the Investor Advisory Committee. Thank you also to Marc Sharma, Adam Moore, and Charles Kwon for their work with the Committee, particularly in helping to bring the new IAC members onboard in time for today’s meeting.
- 1Press Release, Securities and Exchange Commission, SEC Announces Four New Members of Investor Advisory Committee (June 1, 2026), https://www.sec.gov/newsroom/press-releases/2026-50-sec-announces-four-new-members-investor-advisory-committee.
- 2See Commissioner Hester M. Peirce, Just Passing Through: Remarks at the Meeting of the SEC Investor Advisory Committee (June 5, 2025), https://www.sec.gov/newsroom/speeches-statements/peirce-remarks-iac-060525.
- 3See U.S. Securities and Exchange Commission, Investor Advisory Committee, Meeting Agenda (March 12, 2026), https://www.sec.gov/about/advisory-committees/investor-advisory-committee/iac031226-agenda.
- 4Semiannual Reporting, Release No. 33-11414 (May 5, 2026) [91 FR 24968 (May 7, 2026)] at text following n.253, https://www.govinfo.gov/content/pkg/FR-2026-05-07/pdf/2026-09095.pdf; See also id. at paragraph accompanying nn.160-161 (“Less frequent periodic disclosures may affect management incentives. If less frequent disclosure reduces scrutiny of issuers as discussed above, then this could reduce potential managerial incentives to overly focus on short-term outcomes to the detriment of long-term performance. Survey evidence has found that management feels pressure to meet short-term earnings benchmarks, with a majority reporting a willingness to make corporate investment or operating decisions that smooth earnings (i.e., reduce their volatility), even if such decisions would reduce long-term value by a small amount. Still, reductions in the reporting frequency are less likely to affect decision-making regarding long-horizon outcomes, such as investment decisions that are intended to generate profits five or ten years down the road. Further, other factors may play a larger role in short-termism concerns than the periodic disclosure cycle, such as executive compensation design or messaging to investors through, for example, earnings guidance.”).
