In 2004, the SEC issued a proposed rule to require broker-dealers to provide their customers with enhanced disclosures at both the point-of-sale and in the subsequent transaction confirmation of the puchase of mutual fund shares. The focus of this rulemaking is to improve disclosures about the costs and conflicts of interest that arise from the distribution of mutual fund shares.
As an example, this SEC proposal would require broker-dealers to fully disclose their compensation for selling mutual fund shares, including revenue-sharing arrangements and any portfolio brokerage arrangements that may create a conflict of interest for them. The proposed rule would require broker-dealers to inform customers about whether their salespersons receive extra compensation for selling certain fund shares or fund share classes. Finally, this proposal would require the disclosure of all shareholder service fees, recordkeeping and transfer fees, seminar sponsorships, or other types of payments that compensate the broker-dealer for the costs it incurs as a part of its mutual fund distribution activities.
The SEC re-opened the comment period on this proposed point-of-sale disclosure rule in 2005, but a final rule has not been issued yet.
In 2007, the SEC propsed a new rule to authorize the use of summary prospectuses by mutual funds. This SEC proposal would improve the disclosure regime for mutual funds by providing investors with the most important information about a fund, in a concise, 2-3 page format and written in plain English. This "summary" prospectus would be sent to investors in lieu of the longer prospectus document that is filed with the SEC. An investor can obtain more detailed information about a fund by accessing the full prospectus document and the Statement of Additional Information on a fund's website. This SEC proposal to authorize the use of summary prospectuses was finalized in January 2009.