NASD Chairman and CEO Robert Glauber told a packed room at the Investment Company Institute’s annual gathering May 18 in Washington, that the NASD should extend its proposed mutual fund point-of-sale disclosure document, Profile Plus, to exchange-traded funds, separately managed accounts, and, in some form, to fixed, variable and equity-indexed annuities. Glauber also said the NASD and the MSRB, which regulates 529 plans, are working together to “erase” the fact that sales of mutual funds and 529 plans, which are “mutual funds with some added tax benefits,” are governed by different sets of rules written by different regulators.
Last year NASD proposed the idea of Profile Plus as a way to help investors get concise and to-the-point information before buying a fund. It would be a two-page summary of the funds strategies, objectives, performance, and risks on the first page and the conflicts and the costs on the second page, Glauber said. Investors should also have online access to the Profile Plus document, he stressed. He cited research from ICI, which found that 90% of mutual fund shareholders have Internet access, two thirds of them go online every day, and they are more likely than other Internet users to use the Web to get financial information or make transactions.
SEC Chairman Christopher Cox plans to hold a public roundtable June 12 to discuss how to use the Internet to improve disclosures for investors. “I hope and expect that this question of online point-of-sale disclosure will be much discussed,” Glauber said. The ICI, too, he said, has called for Internet disclosure and reform of the mutual fund disclosure process. “It’s time for the mutual fund industry to get behind the Profile Plus and integrated delivery over the Internet,” he said.
Yet another initiative the NASD is working on is deploying a firm liaison program, Glauber said, through which registered reps and compliance officers can call a specific NASD employee and ask compliance related questions.