In a host of comment letters earlier this year, several industry groups said the proposal could harm retirement savers, and SEC Commissioner Hester M. Peirce said in June she hopes the agency will consider scrapping the proposal altogether, given extensive industry pushback.
Therefore, the SEC Investor Advisory Committee recommended that the SEC revisit its economic analysis for the proposal, and weigh the costs and benefits before making any final conclusions.
"We thought the SEC ought to go back and really look at the additional information that came in from the commenters and the costs that would be associated with this proposal, relative to any benefits that would be derived from the proposal," said Paul Roye, a member of the IAC and a former senior vice president at Capital Research and Management Company, at the committee's Sept. 21 meeting.
While the committee did not take a position on specific alternatives to swing pricing, "what we did stress was that before (the SEC) embraced any of those alternatives, you do the cost-benefit analysis, you do the economic analysis, before you move to alternatives like liquidity fees," Roye added.
Separately, the IAC recommended that the SEC promulgate rules to increase disclosures on human capital management, which the SEC has said it plans to do in the coming months, according to its most recent regulatory agenda.
In 2020, the SEC adopted rules to modernize human capital disclosure, but the committee said the rules did not give enough guidance on what information to disclose, and it supports the SEC's expected efforts to further strengthen such rules.
"We believe our recommendation today would bring to bear the kinds of information that investors continue to seek under the current rules with the reliability, consistency and comparability they need to understand, assess and incorporate labor into their models and analyses," said Cambria Allen-Ratzlaff, an IAC member and managing director and head of investor strategies at JUST Capital, at the Sept. 21 meeting.
Specifically, the committee recommends requiring disclosure of the number of people employed by the issuer, broken down by full-time, part-time, contingent and contract employees; turnover or comparable workforce stability metrics; total cost of the issuer's workforce, broken down by major components of compensation; and demographic data that would give investors an understanding of how the company is working to develop new sources of talent and the effectiveness of such efforts.
The committee also recommends "narrative disclosure, in the management discussion and analysis, of how the firm's labor practices, compensation incentives and staffing fit within the broader firm strategy," Allen-Ratzlaff added.
