|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
SEC Adopts New Disclosure Rules For Mutual Funds
Jacqueline Bell
Securities Law 360. November 19, 2008
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EXCERPT: The U.S. Securities and Exchange Commission has voted to require mutual funds to give investors a summary in “plain English” of all the information they need to make an informed investment decision. Under the rules approved by the commission Wednesday, every mutual fund will have to clearly describe the fund's investment objectives, strategies, risks and costs in a summary provided at the front of its prospectus. The summary also must include details on the fund's investment advisers and portfolio managers, purchase and sales procedures, and tax consequences.
The commission also approved provisions that would encourage funds to boost their use of online communication with investors. The online materials must be accessible and user-friendly and allow investors to move easily between the summary and the longer prospectus. “Many investors often find current fund prospectuses to be lengthy, legalistic and confusing. This mutual fund disclosure framework will provide information that is easier to use and more readily accessible, while retaining the comprehensive quality of the mutual fund information available today,” said Andrew J. Donohue, director of the SEC’s division of investment management. SEC Chairman Christopher Cox said at the meeting Wednesday that the millions of Americans who are invested in mutual funds need access to clear, easy-to-understand information, particularly as they make investment decisions in the current economic climate. […] The new rules also allow mutual funds to send investors a summary prospectus, which would satisfy SEC requirements, as long as the summary prospectus, the longer prospectus and other required information is easily obtainable online. Under the new amendments, mutual funds are required to give investors the option of requesting a paper copy of the prospectus. Investors accessing the prospectus online must also be able to download and save the document. |
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