DISCLOSURES TO INVESTORS AT POINT OF SALE



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.

  • Final SEC Summary Prospectus Rule
    On January 13, 2009, the SEC issued its final summary prospectus rule, including an explanation of the changes it made to the proposed rule. This SEC rule improves mutual fund disclosures by providing investors with the most important information about a fund in a concise format written in plain English. The rule also enhances the means of delivering more detailed information to investors, in conjunction with the disclosures included in the statutory prospectus and the Statement of Additional Information.
  • CMFI Letter Submitting Additional Comments on the Summary Prospectus Rule
    On August 29, 2008, CMFI submitted a letter to the SEC with additional comments on the proposed summary prospectus rule.
  • SEC Request for Additional Comments on the Summary Prospectus Rule
    On August 6, 2008, the SEC re-opened the comment period for the proposed summary prospectus rule and requested additional comments on its proposal.
  • CMFI Comment Letter on the SEC Summary Prospectus Rule
    On February 13, 2008, CMFI submitted a comment letter in response to the SEC’s proposed summary prospectus rule.
  • Proposed SEC Summary Prospectus Rule
    On November 21, 2007, the SEC issued a proposed rule to authorize the use of summary prospectuses by mutual funds. This SEC rule improves mutual fund disclosures by providing investors with the most important information about a fund in a concise format written in plain English. The proposed rule also enhances the means of delivering more detailed information to investors, in conjunction with the disclosures included in the statutory prospectus and the Statement of Additional Information.
  • New Comment Period for Proposed SEC Point of Sale Disclosure Requirements
    On March 4, 2005, the SEC re-opened the comment period on its proposed rule, issued in January 2004, to require broker-dealers to provide their customers with information regarding the costs and conflicts of interest that arise from the distribution of mutual fund shares, 529 college savings plan interests, and variable insurance products.
  • CMFI Comment Letter on SEC Point of Sale Disclosure Proposal
    On April 12, 2004. CMFI submitted a comment letter in response to the SEC’s proposed rule on point of sale disclosure by broker-dealers.
  • Proposed SEC Point of Sale Disclosure Requirements
    On January 29, 2004, the SEC issued proposed rules to require broker-dealers to provide their customers with targeted information, at the point-of-sale and in transaction confirmations, regarding the costs and conflicts of interest that arise from the distribution of mutual fund shares, unit investment trust interests (including insurance securities), and municipal securities used for education savings. The SEC’s proposal also improves disclosure of sales loads and revenue sharing.

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.

Document Title: 
Final SEC Summary Prospectus Rule
Document Desc: 
On January 13, 2009, the SEC issued its final summary prospectus rule, including an explanation of the changes it made to the proposed rule. This SEC rule improves mutual fund disclosures by providing investors with the most important information about a fund in a concise format written in plain English. The rule also enhances the means of delivering more detailed information to investors, in conjunction with the disclosures included in the statutory prospectus and the Statement of Additional Information.
Document Title: 
CMFI Letter Submitting Additional Comments on the Summary Prospectus Rule
Document Desc: 
On August 29, 2008, CMFI submitted a letter to the SEC with additional comments on the proposed summary prospectus rule.
Document Title: 
SEC Request for Additional Comments on the Summary Prospectus Rule
Document Desc: 
On August 6, 2008, the SEC re-opened the comment period for the proposed summary prospectus rule and requested additional comments on its proposal.
Document Title: 
CMFI Comment Letter on the SEC Summary Prospectus Rule
Document Desc: 
On February 13, 2008, CMFI submitted a comment letter in response to the SEC’s proposed summary prospectus rule.
Document Title: 
Proposed SEC Summary Prospectus Rule
Document Desc: 
On November 21, 2007, the SEC issued a proposed rule to authorize the use of summary prospectuses by mutual funds. This SEC rule improves mutual fund disclosures by providing investors with the most important information about a fund in a concise format written in plain English. The proposed rule also enhances the means of delivering more detailed information to investors, in conjunction with the disclosures included in the statutory prospectus and the Statement of Additional Information.
Document Title: 
New Comment Period for Proposed SEC Point of Sale Disclosure Requirements
Document Desc: 
On March 4, 2005, the SEC re-opened the comment period on its proposed rule, issued in January 2004, to require broker-dealers to provide their customers with information regarding the costs and conflicts of interest that arise from the distribution of mutual fund shares, 529 college savings plan interests, and variable insurance products.
Document Title: 
CMFI Comment Letter on SEC Point of Sale Disclosure Proposal
Document Desc: 
On April 12, 2004. CMFI submitted a comment letter in response to the SEC’s proposed rule on point of sale disclosure by broker-dealers.
Document Title: 
Proposed SEC Point of Sale Disclosure Requirements
Document Desc: 
On January 29, 2004, the SEC issued proposed rules to require broker-dealers to provide their customers with targeted information, at the point-of-sale and in transaction confirmations, regarding the costs and conflicts of interest that arise from the distribution of mutual fund shares, unit investment trust interests (including insurance securities), and municipal securities used for education savings. The SEC’s proposal also improves disclosure of sales loads and revenue sharing.