Securities Regulation Daily Wrap Up, INVESTOR EDUCATION—Investment fraud, crypto are among 2026 priorities of SEC’s Office of the Investor Advocate, (Jun 26, 2025)
The office, whose mandate includes analyzing the impact on investors of proposed regulations and rules of the SEC and SROs, plans to carefully consider the comments provided to the Crypto Task Force’s requests for information.
In its annual report to Congress, the SEC’s Office of the Investor Advocate (OIA) indicated that conducting research and testing on disclosure rules, advocating for investors hurt by investment fraud, and considering any public comments provided to the agency’s Crypto Task Force are among its fiscal 2026 priorities. The OIA also will focus on informing the Commission’s policy priorities through data collected from investor surveys, considering the implications for investors of the inclusion of alternative investments such as private equity and private credit in retirement savings plans, and studying the risk to investors from China-based variable interest entities listed on U.S. exchanges.
The OIA said that investment fraud continues to be a focus since investor complaints, often citing scams initiated on social media, have not abated. The report includes statistics from the SEC’s Office of the Ombuds showing a 142 percent increase in reports of fraud schemes involving securities and digital assets. The report notes that the numbers generally align with recent data released by the FTC indicating that consumers reported losing more than $5.7 billion in investment scams in 2024, a 24 percent increase over 2023.
Accessibility of disclosures. Another priority for the OIA is to advocate for ways to enhance the accessibility to retail investors of disclosures by public companies, investment companies, and other regulated entities. The OIA expects to explore different approaches to making required disclosures more user-friendly and comprehensible to investors, while also considering the extent to which this may add to the costs and burdens on issuers and other providers of disclosure. A key aspect of this effort will be ongoing engagements with retail investors to develop a more thorough understanding of how investors use the information and to solicit a range of views on how to improve the effectiveness of the current disclosure system, the OIA said.
China-based VIEs. The OIA also intends to focus on heightened risks to investors posed by certain China-based variable interest entities (VIE), particularly U.S.-listed companies based in China that use the VIE structure. The OIA notes that a number of Chinese operating companies that are subject to foreign ownership restrictions imposed by the Chinese government have used the VIE structure as a workaround to raise capital from U.S. investors through U.S.-listed companies that provide economic rights, but not equity ownership, in the operating companies.
The OIA is concerned about the reliability of the financial reporting of these entities, the quality of their disclosures, the enforceability of their contractual arrangements, limitations on shareholder rights, and the extent of control by the Chinese government over the operating companies. The OIA intends to study the investor protection issues surrounding VIEs, and elevate any concerns to the attention of the Commission and relevant SEC staff.
Alternative investments in retirement accounts. In fiscal 2026, the OIA also expects to examine some of the issues surrounding the inclusion of alternative investments, such as private equity and private credit, in retirement savings plans. In previous reports, the OIA has pointed out that the private markets have become an important avenue for investors seeking greater access to investment opportunities. Along with that have come concerns about the heightened risks of investing in the private markets, such as reduced, incomplete, or unreliable disclosure, limited liquidity, and greater risk of fraud and/or investment loss, the OIA stated. It intends to monitor this area, including the interplay between the investor protection issues and ERISA-related issues that arise when defined contribution plans offer those investment products.
SRO proposals. The OIA acknowledged that self-regulation of market intermediaries is a core element of the framework concerning national exchanges, broker-dealers, and clearing agencies. However, given the potential conflicts of interest in SROs’ business models, SEC oversight is needed. The OIA said that in fiscal 2026 it will continue to communicate with investors to determine the possible impact of SRO proposed rules and where investors might benefit from changes in the proposals.
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