More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- Agency and Principal Transactions In passing Section 206(3) of the Investment Advisers Act, Congress recognized that principal and agency transactions can be harmful to clients. Such transactions create the opportunity for RIAs to engage in self-dealing.
The Securities and Exchange Commission has published a prototype "summary prospectus" for mutual funds, and has asked for public comment from investors. The proposed streamlined prospectus would let investors quickly learn key information about a mutual fund.
The Commission voted unanimously on November 15 to propose rule amendments that would enable investors to view a concise, plain English summary of key facts about a mutual fund. The SEC says in a release that it is seeking public comment on the proposed rule amendments, including the summary prospectus, which is available online at www.sec.gov/investor/enhanceddisclosure.htm, along with additional information to help investors understand and participate in the comment process.
The Commission is proposing that the following information be included in a mutual fund summary prospectus:
- Investment objectives
- Principal investment strategies, risks, and performance
- Top 10 portfolio holdings
- Identity of investment advisers and portfolio managers
- Brief purchase, sale, and tax information
- Information about broker compensation and conflicts
The SEC says it is seeking investor input about what improvements would make the summary prospectus easier to read and understand, and what key information investors would like to see included. "The Commission also is seeking comment on its proposal for mutual funds to provide investors the summary information while making the full prospectus available online or in paper copy upon request," according to the SEC. Comments should be received no later than February 28, 2008.