The Securities and Exchange Commission’s approval this week of changes to how it selects members for its Investor Advisory Committee came under fire from one of its own—Commissioner Allison Herren Lee.
Herren Lee said the new procedures approved Wednesday create nine-person nominating committee made up of staff from across SEC divisions, but “marginalize” input from SEC Investor Advocate Rick Fleming, the only investor representative on staff at the SEC who has informally led IAC membership recommendations to the regulator for the past six years.
The congressionally-mandated IAC was created in 2012, and can include up to 20 outside members who are charged with consulting and advising the SEC on investor protection, regulation including fee structures and disclosure and the promotion of investor confidence.
The final version of the SEC procedures now includes the Investor Advocate on the nominating committee. “But he is affirmatively excluded him from a leadership position, except once every nine years,” Herren Lee said. “Even then, his views could be simply overridden by a majority of members from other offices—unlike any construct we have in place for any other advisory committee. In fact, that office was not even initially included on this new staff nominating committee.”
In reality, the SEC has other motivation for changing advisory committee selection—namely, the very public rebuke House leadership gave the agency in January over its lack of diversity on all of its advisory boards.
House Financial Services Committee Chairwoman Maxine Waters (D-CA) and House Subcommittee on Diversity and Inclusion Joyce Beatty (D-OH), sent a letter to SEC chairman Jay Clayton expressing concerns about the ongoing lack of ethnic and racial diversity on the agency’s four advisory committees, including the newest 23-member Asset Management Advisory Committee, which they pointed out has Black committee members.
Clayton said at Wednesday’s SEC meeting that one goal of the new procedures is to encourage greater diversity on advisory boards.
To facilitate diversity, Robert Marchman, the SEC’s senior policy advisor for diversity and inclusion, has been appointed as the IAC’s next chairman.
According to the SEC’s new procedures: The nominating committee will identify candidates based on functional membership categories published on the SEC’s website, and members of the public are encouraged to express their interest in serving on the Committee.
“The staff-led nomination process is designed to promote a diversity of background, expertise, and perspective to assist the Committee in addressing the wide range of issues affecting investors,” the agency said in a statement.