March 16, 2007
SEC Investment Management Initiatives
Excerpts from a March 16 speech before the ABA Section of Business Law by Andrew J. Donohue, Director, Division of Investment Management, SEC, outlining the Division's initiatives:
In previewing the mutual fund simplified disclosure initiative, I have stated that the ultimate goal of the initiative is Giving Investors the Information They Need, in a Form They Can Use... A more long-winded way of describing the goal is facilitating more user-friendly, plain English mutual fund disclosure and streamlining the delivery of mutual fund information through the increased use of the Internet, interactive data, and other electronic means of delivery.
One issue the staff is considering closely is the type of disclosure that 401(k) participants receive about the funds they invest in or are considering investing in.... I believe that 401(k) participants investing in funds would benefit greatly from standardized information about fund investments – if that standardized information is clear and meaningful.
The primary use of 12b-1 fees has shifted from the limited marketing and advertising purposes that were originally envisioned. Instead, it appears that, in many cases, rule 12b-1 fees are used primarily as a substitute for a sales load or for servicing. Against that backdrop, and with a forward-looking perspective, it would seem wise to reconsider rule 12b-1, both the rule itself and the factors that fund boards must consider when considering approval or renewal of a rule 12b-1 plan.
I am committed, in 2007, to undertaking the beginning of a review of fund director responsibilities under the Investment Company Act, Commission rules and Commission exemptive orders. I have begun to engage in a dialogue with fund directors to see whether the Division should consider recommending that the Commission amend its rules to revise requirements that may not make the best use of director time.
In my mind, it is important that U.S. regulators consider effective regulatory techniques from foreign jurisdictions and incorporate them into our regulatory approach where beneficial and appropriate. We can learn a great deal from the regulatory systems in other jurisdictions.
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