Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

SEC Committee Advocates for Summary Mutual Fund Shareholder Reports
December 29, 2017

On December 7, the Investor Advisory Committee of the Securities and Exchange Commission (SEC) adopted a recommendation that the SEC seriously explore the development of a summary disclosure document for mutual fund companies to use to satisfy their shareholder report delivery requirements. Such summary documents would be relevant to many insurance companies and their affiliates, because they would, for example, reduce the costs of delivering mutual fund shareholder reports to holders of variable insurance products that invest in such funds.

The committee’s recommendation comes on the heels of the SEC’s failure late last year to adopt a rule allowing electronic delivery of periodic shareholder reports unless the shareholder opted for paper delivery. The SEC’s inaction last year was probably influenced by investor advocates who opposed the rule because its reliance on implied consent to electronic delivery reduced transparency and investor access to the reports, and by many consumers’ continued preference for paper delivery of disclosure documents. Importantly, the committee characterized its recommendation as a stop-gap of sorts that could significantly improve on the status quo while the SEC continues to explore ways to transition more comprehensively to electronic delivery.

The summary disclosure document envisioned by the committee would include high-level information investors care about and need to know: e.g., fund costs, performance, and fund holdings. It would also prominently notify investors about the availability of the full report and where to find it. The summary document would be designed for mail or email delivery depending on the individual investor’s preferences. And, for electronic users, the committee encouraged a "layered disclosure approach" under which users could "click through" to obtain more detailed disclosures on desired topics. Lastly, the committee recommended the SEC seek public comment on the concept, content, and format of such a summary disclosure document, as well as conduct investor testing of the summary disclosure.
Related Practices
Financial Services Regulatory
Related Industries
Life, Annuity, and Retirement Solutions Securities & Investment Companies
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.