Securities and Exchange Commission (SEC) Chairman Jay Clayton told the nation’s top regulators and securities attorneys today that the agency is creating the first-ever website and national database that investors can search to ferret out barred and suspended advisors and brokers.

“We think this will be particularly valuable when bad actors have shifted from the registered space for investment advisors and broker-dealers to the unregistered space,” Clayton told attendees at the Practising Law Institute’s 49th Annual Institute on Securities Regulation in New York City today.

“Clearly, there are fraudsters in our marketplace who are seemingly unafraid of, or undeterred by, the risk of being caught. The SEC can target the underlying conduct of those fraudsters—and we do—but we also can and should arm investors with information that makes it more difficult for them to be defrauded.”

The SEC’s website and database—the first of its kind—will contain a searchable database of individuals who have been barred or suspended for federal securities law violations. The resource is intended to make the prior actions of repeat offenders and fraudsters more visible to investors, said Clayton.

The SEC will also continue to hammer home the importance to investors of performing background checks on all their financial professionals, he added.

“A question we should be continuously asking is: Are there opportunities to deter, mitigate or eliminate wrongdoing before an enforcement action becomes necessary?” Clayton said.

The SEC chairman also vowed to streamline the agency’s agenda—both in the short term and in its five-year plan—to focus on a lack of transparency. “Looking back at enforcement actions, a common theme emerges—where opacity exists, bad behavior tends to follow,” he said.

Advisors’ fee disclosures will also continue to be a hot button issue for regulators, he added.

“A narrative that flows throughout the commission’s inspection and enforcement programs is complex, obscure, or hidden fees and expenses that can harm investors. For example, some firms may invest clients’ money in a mutual fund share class that charges a 12b-1 fee when a lower-cost share class of the same fund is available, or advisors may improperly choose to use fund assets to pay expenses that should be paid by the firm.”

The SEC is also looking hard at instances where brokers charge fees that are designed to cover the costs of services provided while also marking up the prices of securities to earn a profit that is not disclosed.

“I expect that our Enforcement Division will continue to be active in pursuing cases where hidden or inappropriate fees are at issue, but we also are exploring whether more can be done to clarify fee disclosures made to retail investors, and thereby deter and reduce the opportunities for misbehavior,” Clayton said.

As part of his efforts to empower retail investors, he said he plans to give Main Street investors a much more prominent seat at the shareholder table. “I have become increasingly concerned that the voices of long-term retail investors may be underrepresented or selectively represented,” he said.

The SEC staff estimates that almost 79% of Russell 1000 companies are owned by retail investors, either directly or indirectly through mutual funds, pensions or other employer-sponsored funds, or through accounts with investment advisors (if foreign ownership is excluded).

That makes it that much more important for investment advisors to vote proxies according to their investors’ best interests, Clayton said.

“A majority of Main Street America’s dollars are invested in vehicles where the investor—the person with their money at risk—is not the voting shareholder,” he said. “Often, voting power rests in the hands of investment advisors who owe a duty to vote proxies in a manner consistent with the best interests of the fund and its shareholders. A question I have is: Are voting decisions maximizing the funds’ value for those shareholders?”

Even in situations where voting power is held by or passed through to Main Street investors, it is noteworthy that, according to SEC data, participation rates in the proxy process are low. In the 2017 proxy season, retail shareholders beneficially owned 30% of the shares in U.S. public companies; however, only 29% of those shares voted.

“This may be a signal that our proxy process is too cumbersome for retail investors and needs updating,” Clayton said.

He said the agency is also interested in facilitating ways that disparate shareholders can find common ground for reconciling their goals and building consensus using shareholder proposals.  

“History has shown that shareholder proposals can gain traction and lead to corporate governance changes that better track the long-term interests of Main Street investors,” Clayton said.