Good afternoon and welcome to the second Investor Advisory Committee meeting of 2025, and the first of my Chairmanship. I wish I could be there with you in person. I am now in my third tour of duty at the SEC—having previously served from 1990-1994 on the staff of former Chairmen Richard Breeden and Arthur Levitt, as a Commissioner from 2002-2008, and now as Chairman. As I have said before, it is a new day at the SEC, and I look forward to working with the Committee in this important work.
Earlier this year, the Commission made a call for candidates to fill vacancies on the Committee. We received almost 200 submissions. Commission staff is now in the process of reviewing these submissions to make recommendations to the Commissioners on which candidates to interview. Hopefully, final selections will be made in time for the new members to join your next quarterly meeting in September. The substantial interest in joining the Committee demonstrates the importance of the work that all of you are doing, and I thank you for your commitment to public service.
At today’s meeting, the Committee will discuss the proxy voting process for funds and trends in pass-through voting. The topic of proxy voting, proxy advisors, and shareholder activism is extremely important to me, because not only does it have profound implications for corporate governance, but, in the context of funds, it also implicates the fundamental fiduciary duty that advisers owe clients to act in their best interest. I must underscore that investment advisers or pension-fund managers violate their fiduciary duties if they put their own priorities ahead of their clients’ interests when voting proxies. Prior to my arrival at the Commission in April, under the leadership of Acting Chairman Uyeda, the Division of Corporation Finance issued Staff Legal Bulletin No. 14M on shareholder proposals and rescinded the prior Staff Legal Bulletin No. 14L, which was a significant deviation from decades of administration of the Commission’s shareholder proposal rule. It is an important principle that individual investors should be free to vote their shares however they see fit, and pass-through voting may provide investors with the opportunity to do so. I look forward to hearing about recent developments in this space.
Today the Committee will also discuss the use of non-GAAP financial measures. In order to be useful to investors and to avoid being misleading, the prudent use of non-GAAP measures requires that they be presented transparently and clearly reconciled to the most directly comparable GAAP measure. Their use must be consistent over time and accompanied by disclosure that provides meaningful context to ensure informed decision-making.
Finally, the Committee will discuss proposed recommendations to harmonize the use of arbitration clauses by investment advisers and brokerage firms. This recommendation follows the Committee’s discussion of these issues at their meeting last December. The use of arbitration has been an important conflict resolution process for a century, recognized by the Federal Arbitration Act of 1925, and I look forward to seeing a readout of the Committee’s thoughts.
Thank you to the Committee members and panelists for your time in preparing for this meeting. I would also like to thank our Investor Advocate Cristina Martin Firvida and her staff for their hard work in organizing today’s meeting. I look forward to joining you in person at your next meeting.
