It's About Time

A recent commissioned online study conducted by Forrester Consulting on behalf of NewRiver entitled, The Short-Form Prospectus: Industry Poised For Savings, Transparency, and Innovative Ways to Communicate With Investors, found that nearly all the respondents–made up of 150 companies that sell mutual funds and annuities–were in favor of the short-form prospectus, with 95% stating they would be somewhat or very likely to consider delivering the short-form prospectus if the SEC ruling prevails. More specifically, the study says “participants believe this streamlined delivery would result in a significant opportunity for reducing costs and could lead to better ways of producing and delivering investor communications.”

But the SEC has been flooded with comment letters (the comment period closed February 28) that raise some issues of concern with the proposed rule. For instance, the Securities Industry and Financial Markets Association (SIFMA) and the Investment Company Institute (ICI) told the SEC in a joint letter that requiring quarterly updates of performance and portfolio holdings in the summary prospectus “would reduce the industry’s incentive to utilize the summary document, due to the significant administrative and operational burdens it would create.”