SEC Investor Advisory Committee Recommends Funding Law School Clinics

By Ben Dell’Orto, Spring 2018 IAC Student Intern

Ask and you shall [get a recommendation to] receive.

Last October, the clinic’s own Qudsia Shafiq and Professor Iannarone testified before the Investor Advisory Committee of the SEC about the benefits investor advocacy clinics provide. The committee has since then recommended that law clinics like ours receive grant funding to keep the clinics open.

FINRA helped to open several clinics by providing $250,000 grants to eight law schools, to be used during the first three years the clinics were opened. However, the organization expected these clinics to obtain their own funding after the three years had passed, and though some clinics such as ours have managed to stay open, three of the eight clinics receiving the startup money have closed.

Though a five-out-of-eight success rate might sound pretty good, it is possible that some colleges elected not even to attempt to open a clinic, since they didn’t think they would be able to support the clinic long-term. The recommendation describes, for example, a program by the International Revenue Service which helps fund low-income taxpayer clinics, such as the one at Georgia State. The IRS matches the clinics up to $100,000 to support the clinics. This has resulted in all but one US state having a taxpayer clinic. Meanwhile, only nine states have investor advocacy clinics. While there are plenty of reasons this could be the case, it his hard to ignore the effect these grants have had.

Our clinic accepts six students per semester to work on these cases, though there is considerable interest from students across the law school. And while allowing more GSU law students to participate would be great, creating more clinics like ours is even more important. Our clinic receives requests for representation from people throughout the southeast, because many states lack their own clinics or have overburdened clinics. Having felt the appreciation for our efforts—even from clients who we decided not to offer representation—it is clear that there is value in these programs. Investors around the country lack either the personal funds or high-value claims that attract private attorneys, and these programs provide an alternative to claims with merit.

The committee recommends the funds to provide permanent funding to clinics come from the SEC Investor Protection Fund. The fund’s goal “is to educate and protect retail investors.” Given clinics’ commitment to representing hurt investors and writing these educational blog posts, clinics are a great way to achieve that goal.

Qudsia Shafiq’s full remarks, cited in the committee recommendation, can be found here.