Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > SEC

SEC Proposes Rules to Improve Fund Advertising

Your article was successfully shared with the contacts you provided.

May 14, 2002 — The Securities and Exchange Commission proposed new rules intended to encourage mutual fund advertisements to convey “more balanced” information to prospective investors, specifically in regard to past performance.

The amendments are designed to “raise standards for mutual fund performance advertising so that investors are informed and not misled,” the SEC said.

Specifically, the amendments proposed would:

  • Require fund advertisements that contain performance information to include disclosure that past performance does not guarantee future results and that current performance may be lower or higher than the performance quoted.
  • Require fund advertisements to include disclosure that would direct investors’ attention to a fund’s charges and expenses;
  • Require more prominent disclosure in fund advertisements of important information, such as the dates during which quoted performance occurred; and
  • Reemphasize that fund advertisements are subject to the antifraud provisions of the federal securities laws.

The proposed amendments would also require funds that advertise performance to make available, by a toll-free or collect telephone number, returns that are current to the last day of the previous calendar month, the SEC said. Fund advertisements would be required to identify the telephone number and, if available, a Web site where an investor could obtain this information.

The SEC noted that under existing rules, funds that advertise performance information typically include returns for 1, 5, and 10-year periods that are current only to the last day of the most recent calendar quarter.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.