SEC Commissioner Aguilar Encourages Greater Involvement by Institutional Investors (with Lofchie Comment)

SEC Commissioner Luis A. Aguilar gave a speech on the important role of institutional investors in two respects: (i) as monitors of public disclosures made by emerging growth companies that are exempted from some of the otherwise applicable disclosure requirements by the JOBS Act and (ii) as private overseers of executive compensation and other issues in good corporate governance. In both these regards, he suggested that there is, or should be, an implicit partnership between institutional investors and the SEC as the public overseer of corporations.

Lofchie Comment: It would be hard to interpret Commissioner Aguilar's remarks as being anything other than critical of the JOBS Act. See also another recent speech in this vein: Commissioner Aguilar Speech: Fighting against Efforts to Weaken Investor Protections; E.g., the JOBS Act (with Lofchie Comment). There is significant governmental opposition, quite fierce opposition at the level of State regulators, and at least material questions within the SEC, as to provisions of the JOBS Act. The Commissioner is correct to emphasize the importance of institutional investors as guardians of the marketplace. It is not obvious, however, that the demands of government and the interests of investors are as aligned as the Commissioner hopes. In general, the SEC should work with institutional investors to understand their concerns (and consider how to address those concerns) rather than assuming that institutional investors share the interests of the SEC. Executive compensation is surely a concern, as the Commissioner asserts. So is the heavy regulatory burdens that Congress and the SEC have imposed, such as conflict minerals disclosure, as to which there seems to be a general consensus that there will be a very significant cost to business without corresponding good.

See: Institutional Investors: Power and Responsibility.For a compilation of recent news articles on the JOBS Act, link to Current Topics - JOBS Act.