[Federal Register Volume 59, Number 208 (Friday, October 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26762]


[Federal Register: October 28, 1994]


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SECURITIES AND EXCHANGE COMMISSION

[Securities Exchange Act Release No. 34885/October 24, 1994]


Customer Service Plan of the Securities and Exchange Commission

    In response to Executive Order 12862 issued as part of the Vice 
President's National Performance Review, the Securities and Exchange 
Commission (SEC) developed a customer service plan. The goal of the 
plan is to enhance investor protection through an improved investor 
education effort and a redirection of resources to augment the SEC's 
responsiveness to investor concerns and complaints. The plan submitted 
to the Vice President on September 8, 1994 was modified slightly on 
October 24, 1994. The modified plan is as follows:
    The SEC is responsible for protecting investors through enforcement 
of the federal securities laws and oversight and regulation of the 
securities markets. Individual and institutional investors have 
trillions of dollars invested in securities and mutual funds in the 
United States and abroad. While the SEC does not approve or guarantee 
any investments, it is responsible for ensuring that securities issuers 
provide full disclosure of material information to investors and that 
markets adhere to fair standards.
    Investors deal directly with the SEC through its Office of Consumer 
Affairs, which is responsible for processing and responding to 
inquiries and complaint letters from the public. In fiscal 1993, the 
SEC received over 34,700 investor complaints and inquiries. Although 
the SEC has no authority to provide legal representation to investors, 
the SEC may request information from brokerage firms and securities 
exchanges regarding particular problems. The SEC obtains invaluable 
leads from investors; approximately 18% of investigations each year 
have resulted, at least in part, from investor complaints.
    The general public also deals directly with the SEC through its 
Public Reference Rooms located in Washington, D.C., New York City, and 
Chicago. These facilities maintain a library of corporate filings, 
Commission releases, and other documents for use by the public. The SEC 
staff provide assistance to the public in locating and obtaining 
information and in using the agency's electronic filing system, known 
as EDGAR. In fiscal 1993, these facilities had nearly 45,000 visitors 
requesting nearly 63,000 documents and microfiche, and over 121,000 
telephone inquiries.
    In its role of supervising the public securities markets, the SEC 
processes and reviews the filings of more than 13,000 entities that are 
required to file prospectuses, annual and quarterly reports, proxy 
statements and other informational documents. It also acts on the rule 
filings of the various stock exchanges and self-regulatory 
organizations. Efficiency is paramount for these time-sensitive 
filings.
    Because of its diverse customer base and the importance of its work 
to investors and the financial markets, efficient and effective 
customer service is a top priority at the SEC. The SEC has undertaken 
several initiatives to improve its ``user- friendliness'' and to 
educate investors.

Mutual Fund Surveys

     In November 1993, the SEC conducted a voluntary telephone 
consumer survey of up to 1,000 households to obtain background 
information regarding the public's understanding of the risks involved 
with purchasing mutual funds sold through banks. The survey found that 
28% of those surveyed believed that all mutual funds sold through banks 
are insured, and of people who have bought funds through banks, 66% 
believed that money market mutual funds are federally insured.
     Between January and March 1994, the SEC arranged four 
focus groups of 10 to 20 investors each to obtain more detailed 
information from individual investors of mutual funds. The first two 
groups addressed the SEC's concern that consumers do not adequately 
understand the risks involved with investing in mutual funds sold 
through banks. The other two sessions provided the SEC insight on 
investor's understanding of mutual fund prospectuses and the 
information they derive from the prospectuses.

Education

     On March 10, 1994 the SEC, along with other securities 
regulators, released a brochure, Invest Wisely, which provides basic 
information to help investors select a brokerage firm and salesperson, 
identify decisions to be made before making an initial investment 
decision and address a problem that may arise. This brochure also helps 
investors identify questions they should ask, provides background 
information about the securities industry, and describes practices that 
may signal a problem.

Consumer Affairs Advisory Committee

     On March 10, 1994, Chairman Levitt announced the creation 
of the Consumer Affairs Advisory Committee. The purpose of this 
committee is to open a channel through which the SEC can receive advice 
and information to help it better address the needs of investors in 
their role as consumers of financial products and services. Made up of 
members with diverse backgrounds and expertise, the committee will 
continue to explore broad, fundamental issues of concern to investors, 
especially disclosure and communication of information from 
corporations, brokerage firms, investment companies and investment 
advisers to their investors/clients. The committee also will address 
regulatory simplification and examine how the SEC can be more 
responsive to consumer needs and effective in helping to resolve 
consumer problems.

Streamline Action on Rule Filings

     Since taking office in July 1993, Chairman Levitt has 
taken significant steps to virtually eliminate the backlog of overdue 
rule filings by the stock exchanges and the self-regulatory 
organizations (SRO). The Commission has proposed rule amendments that 
would increase the number of SRO rule filings that may become effective 
immediately, and instituted procedures to ensure that the Commission 
will take final action on other filings within a six-month period.

Reorganize the SEC's Enforcement Efforts

     The SEC's ability to hunt down securities violations has 
been enhanced by placing all regional SEC offices under the supervision 
of the Enforcement Division and relocating certain operations. This has 
streamlined the organization and provided more efficient allocation of 
resources.
    The SEC plans to take further action this fall regarding education 
of investors and improvement of customer service, including:
     The SEC will publish and distribute a second brochure, 
entitled Invest Wisely: Mutual Funds, to provide investors with basic 
information on mutual funds. The SEC plans to create a series of 
brochures to help investors become better educated consumers.
     The SEC will conduct additional surveys and focus groups 
to develop other meaningful and useful solutions for better education 
of investors.
     The SEC will disseminate information to investors via an 
electronic bulletin board on Internet. Such information will include 
Investor Alerts, descriptions of new or emerging types of securities 
fraud; Information for Investors, articles on a variety of specific 
topics; and SEC publications that presently are available only in 
hardcopy.
     The SEC will establish a toll-free consumer hotline to 
provide investors and the general public with useful information 
regarding common consumer inquiries. The topics will include how to 
file investor complaints; what the SEC can and cannot do for investors; 
how to obtain information from public companies, brokerage firms and 
other investment representatives; and how to order certain publications 
from the SEC.
     The SEC will install a new and improved Information Line 
in the headquarters Public Reference Room to provide callers with 
access to general information about the SEC, a means to request 
facsimiles of the recorded general information and the ability to 
transfer within the SEC to specific offices for detailed information.
     The SEC is providing enhanced training to its consumer 
affairs specialists at headquarters and in the field offices. A special 
review of the consumer affairs function is underway and several 
recommendations have been implemented to improve the agency's 
responsiveness to consumers.

SEC's Commitment to Customers

    The SEC makes a commitment to its customers to do the following:
    1. Provide courteous, timely and responsive answers to all 
customers.
    2. Suggest alternatives or options to customers when the SEC is 
unable to provide direct assistance.
    3. Obtain comments and suggestions from customers on how to improve 
or modify the SEC's consumer affairs program.
Jonathan G. Katz,
Secretary.
[FR Doc. 94-26762 Filed 10-27-94; 8:45 am]
BILLING CODE 8010-01-P