Adam’s Lib: Remarks at the Meeting of the SEC Investor Advisory Committee

Thank you, Brian [Schorr]. And thank you to the Committee and panelists for graciously giving of your time today at this first Investor Advisory Committee meeting of 2026. I am sorry that it also is the last IAC meeting for James Andrus, Gina-Gail Fletcher, Colleen Honigsberg, Christine Lazaro, Andrew Park, Dr. David Rhoiney, Paul Roye, and Brian Schorr. Thank you for devoting your time, expertise, energy, and service to help improve our capital markets for the benefit of American investors.

As Chairman Atkins noted earlier this week,[1] March 9^th was the 250^th anniversary of Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations. The book reflects Smith's classical liberalism, which is relevant to the Commission's work and hence to yours as you advise us in ours.

Smith's version of liberalism liberates and celebrates the individual who contributes to society. Economist Maryann Keating explained that the resulting "[p]olicy principles for constructive reform" are not "those of utilitarian dreamers who seek to change human nature and control outcomes," but rather "Adam Smith's system prioritizes the liberty to act in congruence with an individual's natural sense of morality and societal norms" and "a nation granting people the liberty to pursue immeasurable personal goals increases the probability of attaining outcomes that increase individual and aggregate well-being."[2] In his own words, Smith warned: "The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could be safely trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it."[3] A humbling admonition for a regulator!

But a regulator I am, and so let me turn to the topic of the first panel-public company disclosure reform. The SEC requires companies to spend a lot of time and attention preparing disclosures that may obfuscate rather than add to the mix of information on which investors rely. Certain mandated executive compensation tables, for example, are about as interesting to investors as the chart on the bounties paid on herring from 1771 to 1781 appended to the end of the Wealth of Nations.[4] The laundry list of disclosure obligations public companies face is long, and I welcome your thoughts on how we can pare it back.

I am pleased that, in its second panel, the Committee is taking up the important issue of fund proxy voting. A discussion on and potential solutions regarding funds' difficulty in obtaining a quorum for votes on certain matters under the Investment Company Act of 1940 ("ICA") is overdue. The generally required quorum of more than 50% of the outstanding voting securities of a fund to approve many changes is difficult and costly[5] for funds. Many fund shareholders are retail investors,[6] and they are much less likely to vote than institutional investors.[7] I look forward to hearing the investor perspective on possible solutions posited by the industry. As part of this panel, the Committee will discuss fund proxy reform in the context of, among other things, investor choice in a fund's stewardship of issuer proxies. As you discuss this issue, I hope you will keep in mind that the proxy vote belongs to the fund, not to any individual shareholder in the fund. Even if the fund delegates voting power to its adviser, the adviser must exercise it in the interests of the fund and that fund alone.

I look forward to the continued discussion of securities tokenization. Last meeting's tokenization conversation was helpful, and I hope that today's discussion of the draft recommendation will be equally useful. Genuine, public discussion among Committee members of these difficult and important issues informs the Commission's own consideration of the issue. Competing views should be expressed and discussed before a vote is taken.

As Chairman Atkins and I discussed recently,[8] Commission staff is working on an innovation exemption to facilitate limited trading of certain tokenized securities-much narrower than the "blanket" exemption mentioned in the draft recommendation. Within this narrower vision, I would appreciate the Committee's consideration of several key questions I have about the Committee's positions and draft recommendations for an innovation exemption that both protects investors and enables firms to experiment and innovate with blockchain and tokenization technology.

1. You have argued that mandatory disclosures should seek to provide investors in tokenized securities with a clear understanding of their ownership rights. How are the SEC's existing issuer disclosure requirements insufficient in this regard?

2. Does the Committee believe that broker-dealers and clearing agencies that tokenize security entitlements should be subject to new disclosure requirements relating to such security entitlements? If so, why should tokenized security entitlements be treated differently than security entitlements that are not tokenized?

3. You state that allowing for the atomic settlement of tokenized equity securities requires exemptive relief or reforms to the SEC's existing T+1 settlement rules. Can you clarify why you believe relief or reforms would be necessary for transactions that settle faster than T+1? Would atomic settlement face friction under other existing SEC rules?

4. You have argued that intermediaries for tokenized securities should be regulated and that the trading of tokenized equity securities should be subject to protections that seek to ensure that all investors receive the best terms for their orders. What if there are no intermediaries to regulate? Or, if there are intermediaries, what if they do not clearly fit within the existing intermediary definitions in the Exchange Act (e.g., broker, dealer, exchange, clearing agency)? Does the SEC have statutory authority to impose the requirements that you recommend in such cases?

5. Should the Commission consider allowing different tokenization models in an innovation exemption to help inform their risks, benefits, and regulatory treatment? Should an innovation exemption require a third party to obtain issuer consent to issue tokenized versions of existing equity securities of that issuer?

6. What conditions should apply in an innovation exemption to preserve the fundamental investor protections listed in the recommendation and to minimize regulatory arbitrage?

Again, thank you all for your participation in today's discussions. Thank you also to Marc Sharma, Adam Moore, Adam Anicich, and Charles Kwon for their work with the Committee.